Preamble

The House met at Half-past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

DARTFORD TUNNEL (EXTENSION OF TIME) BILL

HARWICH HARBOUR BILL [Lords]

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL

As amended, considered; to be read the Third time.

Oral Answers to Questions — GERMANY

Newspaper (Ban)

Mr. Gallacher: asked the Secretary of State for Foreign Affairs why the "Neue Volkszeitung" newspaper has been banned for six weeks by the British authorities; and whether he is aware that the ban adversely affects the election compaign of the Ruhr Communist Party by depriving it of its newspaper during the elections.

The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): This newspaper has been banned because it recently published an article inciting the Germans to resist Military Government instructions on dismantling. In view of the fact that it was suspended for a month last year for another attack on the Occupying Powers, six weeks was considered to be the minimum penalty which could be imposed this time. The Communist Party has two other newspapers in the Ruhr area which can serve their cause in the election campaign.

Mr. Gallacher: Is it not the case that the article complained of, which I sent to the Minister, only criticised the trade union leaders in the area for the attitude they have adopted in connection with

dismantling, and said nothing whatever about the authorities or criticised them in any way?

Mr. Bevin: That is the usual Communist ingenuity to achieve their objective.

August Thyssen Works

Mr. Emrys Hughes: asked the Secretary of State for Foreign Affairs if he will consider adapting the August Thyssen Works, near Duisberg, which are scheduled for dismantling for the production of prefabricated steel houses, and allowing them to be retained under international control for supplying the housing needs of Europe's homeless population.

Mr. Bevis: No, Sir.

Mr. Hughes: Does the Minister not realise how difficult he is making things for the trade union leaders in this area of Germany, where there are 200,000 unemployed? Does he not agree that it would be far better for these people to be usefully employed than to be drawing unemployment benefit?

Mr. Bevin: I have given many answers on this point. This Government has done more to get Germany established on a reasonable post-war basis than has anyone else concerned. The remaining capacity of 11 million tons is well accounted for. In the beginning we were faced with demands from, I think, Russia for 5 million tons and from America for 5 million tons. We stood out and succeeded in getting 11 million tons for the Germans.

Mr. Skeffington-Lodge: Can my right hon. Friend say whether this is the plant on which 17 million marks have been expended since the end of the war? May I have an answer?

Joint Export-Import Board

Mr. Piratin: asked the Secretary of State for Foreign Affairs whether, in accordance with paragraph (d) of Article 5 of the Bizonal Fusion Agreement of 17th December, 1947, the British voting strength is equal to the American on the Joint Export-Import Board.

Mr. Bevin: No, Sir. Under Article 5, paragraph (d) of the Revised Fusion Agreement the voting strength of the


national groups represented on the Board of the Joint Export-Import Agency is proportionate to the financial contributions made by their respective Governments to the German economy.

Mr. Piratin: Does the Foreign Secretary recall that on 28th March he or one of his colleagues gave me the answer that we and the United States Government each contributed £15½ million to this body? As our contributions are equal why are our votes not equal?

Mr. Bevin: I do not think that our contributions are equal now.

Mr. Piratin: The answer I received was that they were equal. If the amounts subscribed were equal, why are the votes not equal?

Mr. Bevin: I assure the hon. Member that they are not equal now.

Mr. Piratin: asked the Secretary of State for Foreign Affairs whether the balance sheet of the Joint Export-Import Agency has been published; and if he will make it available to hon. Members.

Mr. Bevin: The accounts of the Agency for the years 1947 and 1948 will be published shortly. Publication in this country will be in the form of a White Paper.

Oral Answers to Questions — POLAND (TEHERAN CONFERENCE)

Mr. Stokes: asked the Secretary of State for Foreign Affairs whether he will publish as a White Paper the decisions arrived at at the Teheran Conference regarding the partition of Poland and the re-adjustment of Poland's western frontier.

Mr. Bevin: No, Sir. As I informed my hon. Friend last July, no decisions on this question were reached at the Teheran Conference.

Mr. Stokes: Has my right hon. Friend observed the statements made by M. Mikolajczyk, and are we to understand that his claim that the partition of Poland was really agreed to by the three Powers at Teheran is absolutely without foundation?

Mr. Bevin: I have no record of such an agreement being arrived at at Teheran.

Mr. Stokes: On a point of Order. I beg to give notice that I shall raise this matter again.

Oral Answers to Questions — SUDAN (FAMINE RELIEF MEASURES)

Mr. Gallacher: asked the Secretary of State for Foreign Affairs (1) why the British Minister of State to the Sudanese Government has refused to permit the Egyptian Red Crescent and similiar Egyptian relief bodies to enter the two North-Eastern Provinces of the Sudan where there is severe famine, in order to bring relief to the starving population;
(2) how many of the population have died as a consequence of the famine in Batana and Budjah in the Sudan; and what steps he is taking to bring supplies to the people.

Mr. Bevin: The hon. Member is misinformed. The Secretary of the Egyptian Red Crescent is at present touring the areas to which he refers and there is close and cordial collaboration in the field between the representatives of the Sudan and Egyptian Governments, the latter of whom are making available additional supplies of grain and clothing. When the threat of famine became apparent in June, 1948, preparations were made to meet it. Supplies of grain were laid by and then distributed where need arose, free, on loan, or on deferred payment. Men have been transported free of cost from the affected areas. Taxation has been remitted or drastically reduced. Communal kitchens and other relief services have been operated. In no place has the situation deteriorated beyond control and no persons have died as a result of the famine.

Mr. Gallacher: If I send the right hon. Gentleman a statement of what has actually happened, will he make further inquiries into what is a serious matter for the Sudan?

Oral Answers to Questions — ITALY (BRITISH SUBJECTS' PROPERTY)

Mr. Fitzroy Maclean: asked the Secretary of State for Foreign Affairs whether he will make urgent representations


to the Italian Government to secure the exemption from death duties of the property in Italy of the late A. A. Waterfield, who was killed by enemy action in Malta in 1942.

Mr. Bevin: It is my intention to make representations to the Italian Government in this case, with which I have much sympathy.

Mr. Maclean: Can the right hon. Gentleman say on what grounds the Italian Government have refused to treat this case in the same way as they would treat the case of an Italian officer killed in action?

Mr. Bevin: I would prefer not to answer that at the moment. I do not really know the actual grounds, and I will have to take up this case not only on legal grounds but on moral grounds as well.

Oral Answers to Questions — HAIFA OIL REFINERY

Mr. Lipson: asked the Secretary of State for Foreign Affairs if he will make representations to the Government of Israel, with a view to hastening the reopening of the oil refineries at Haifa.

Mr. Warbey: asked the Secretary of State for Foreign Affairs what steps he is taking in consultation with the Israeli Government to secure a full resumption of work at the Haifa oil refineries.

Mr. Bevin: I have nothing to add to the reply given to the hon. Member for Bury (Mr. W. Fletcher) on 4th July.

Mr. Lipson: In view of the contribution which these oil refineries can make to the dollar position if they are reopened, will the Foreign Secretary say what steps he is taking, or proposes to take, in the near future to secure that this oil shall be available?

Mr. Bevin: I can add nothing to the answer I have given at present.

Mr. Warbey: Is my right hon. Friend aware that the answer given by his right hon. Friend on Monday did not satisfy hon. Members that this matter was being treated with the vigour and urgency which it demands? Will my right hon. Friend give an assurance that he will leave no stone unturned to get the refineries re-opened?

Mr. Bevin: This is a matter between two other Governments. While I do what I can, I have to treat both of them as independent Governments.

Oral Answers to Questions — EGYPT AND JORDAN (THE NEGEV)

Mr. Warbey: asked the Secretary of State for Foreign Affairs what consultations he has had with the Governments of Egypt and Transjordan regarding their proposals to establish a land link across the Negev.

Mr. Bevin: I am not aware that the Governments of Egypt and Jordan have submitted any specific proposals to establish a land link across the Negev.

Mr. Warbey: Is my right hon. Friend aware that reports have appeared in the Press to this effect, and also to the effect that these proposals have had the support of the British Government? Will he therefore give an assurance that the Government stand by the proposal of the United Nations General Assembly that Israel should have access to the Gulf of Aqaba?

Mr. Bevin: That is not in the Question. I have been asked what consultations we have had with the Governments of Egypt and Transjordan, and I have answered, "None."

Oral Answers to Questions — BURMA (INDIAN ARMY OFFICERS' CLAIMS)

Mr. Grimston: asked the Secretary of State for Foreign Affairs what progress is being made with the settlement of claims of Indian Army officers stationed in Burma at the time of the Japanese invasion.

Mr. Bevin: I presume that the hon. Member's Question refers to British officers of the Indian Army seconded for service with the Burmese Armed Forces. I would refer the hon. Member to the announcement made in the House by my right hon. Friend the President of the Board of Trade on 27th June, 1949, on the extension of the Far Eastern Private Chattels Scheme. The claims of United Kingdom domiciled British subjects who served with the Burmese Armed Forces during the war are eligible for consideration under this extended scheme.

Mr. Grimston: Is the right hon. Gentleman aware that this Question refers to the cases of Indian Army officers; that they have already submitted claims to the Burma Government, the Claims Commission, the Board of Trade and the Commonwealth Relations Office, and that, the matter has now been referred to his Department? Many of them lost everything at the time of the Japanese invasion. In view of the hardship caused by this delay, and the fact that the claims of British Army officers have been settled, will the right hon. Gentleman do all he can to expedite the settlement of these claims?

Mr. Bevin: I will try to do all I can, but the scheme to which I have referred has to be operated.

Oral Answers to Questions — "BRITISH ALLY," MOSCOW (EDITOR)

Mr. Wilson Harris: asked the Secretary of State for Foreign Affairs what steps he is taking to appoint a new editor of the publication "British Ally."

Mr. Bevin: A number of applications, including several submitted by the Ministry of Labour Appointments Department with the co-operation of the National Union of Journalists, have been received and examined. Selected candidates, six in number, were interviewed last Monday. I hope to make an appointment very shortly.

Mr. Wilson Harris: Will the right hon. Gentleman make it clear whether this position is one of responsible editor or technical news editor, and with whom the ultimate responsibility for this appointment lies?

Mr. Bevin: If the hon. Member will put that question down I will give a perfectly clear answer.

Sir Stanley Holmes: Has the right hon. Gentleman considered for this position the editor of the "Spectator"?

Mrs. Leah Manning: Is my right hon. Friend aware that there is at present no British editor of this paper, and in view of its great usefulness and popularity would it be possible for him to hasten both the appointment of a British editor as well as matters at the Moscow end?

Oral Answers to Questions — IRISH-BORN PERSONS (PASSPORT APPLICATIONS)

Sir Ronald Ross: asked the Secretary of State for Foreign Affairs in what particulars the application form for a passport by British subjects who have been born in the Irish Republic has been amended.

Mr. Bevin: Since 1st January, 1949, Section 4 of the passport application form has required applicants born outside the United Kingdom and colonies to give particulars of their fathers' birth. This section has, however, often been misunderstood by persons born in Southern Ireland and the wording of the Section has accordingly been clarified. The amended form, which will come into use shortly, leaves no doubt that it applies to persons born in Southern Ireland. Where an applicant born in Southern Ireland states that his father was born in what is now the United Kingdom or a colony, a passport will be issued describing him as a citizen of the United Kingdom and colonies.

Sir R. Ross: May I take it that this new form abolishes the suggestions that British subjects by birth who have always lived under the Union Jack are now subjects of Eire, which was very offensive to some of them?

Mr. Bevin: I think this clarification makes the position quite clear.

Oral Answers to Questions — INTERNATIONAL RED CROSS CONFERENCE

Mr. Emrys Hughes: asked the Secretary of State for Foreign Affairs why the British delegation at the International Red Cross Conference at Geneva opposed the proposal that concentrated bombing of centres of civilian population be declared a war crime.

Mr. Bevin: No such proposal has been made. The Question, therefore, does not arise.

Mr. Hughes: Is the Minister aware that this was reported on the front page of last Sunday's "Observer"?

Oral Answers to Questions — TRIPOLITANIA

Mr. Thomas Reid: asked the Secretary of State for Foreign Affairs whether he has any statement to make regarding


His Majesty's Government's policy for the disposal of Tripolitania, and, in particular, whether they still regard themselves as bound by the proposals for the disposal of the territory contained in the General Assembly resolution which was rejected by the General Assembly of the United Nations on 17–18th May.

Mr. Bevin: Following the rejection by the General Assembly of the United Nations of the proposals for the disposal of Tripolitania to which my hon. Friend refers, His Majesty's Government are now studying the whole question of their future policy with regard to the disposal of all the former Italian Colonies in Africa in the light of the Assembly debates. The answer to the second part of the Question is in the negative.

Mr. R. A. Butler: Can the right hon. Gentleman say when we are likely to hear of any developments in this important matter?

Mr. Bevin: I could not promise the date now.

Oral Answers to Questions — CZECHOSLOVAKIA (NEWSPAPER CORRESPONDENT)

Mr. Eric Fletcher: asked the Secretary of State for Foreign Affairs what complaints he has received from the Czechoslovak Government in connection with their request for Mr. Godfrey Lias, "The Times" correspondent, to leave Prague.

Mr. Bevin: No complaints were made either to me or to His Majesty's Embassy in Prague about Mr. Lias.

Mr. Fletcher: May we assume from this expulsion of a very distinguished journalist that the Czechoslovak Government does not permit any free and objective reporting of events occurring in that country?

Mr. Bevin: I understand the hint was given for this man to go, and that he did not contest it and went. No representations have been made to me, however, and I do not know the exact circumstances.

Mr. Wilson Harris: Does the right hon. Gentleman know of any feature of totalitarianism as practised in Russia

which has not been adopted by the present Czechoslovak Government?

Major Tufton Beamish: Is not the Czechoslovak Government's fear of the truth a sufficient reason for the action they have taken?

Mr. Bevin: They certainly do not allow free reporting, and the censorship is very strong. That is true of all the countries behind the Iron Curtain.

Oral Answers to Questions — COLONIAL EMPIRE

South-East Asia (Japanese Immigration)

Mr. Thomas Reid: asked the Secretary of State for the Colonies what action he proposes to take on the American representations made to him to allow emigration from overcrowded Japan to British Colonies in South-East Asia.

The Under-Secretary of State for the Colonies (Mr. Rees-Williams): No such representations have been received. The settlement of Japanese in the British or British protected territories in South-East Asia which they occupied during the war would not in any case be entertained.

Citizenship (Legislation)

Mr. Platts-Mills: asked the Secretary of State for the Colonies what reports he has received of unrest among any of the native peoples of Africa, consequent upon the passing of the Citizenship Act by the South African Parliament; and if he proposes to advise all colonial Governments that His Majesty's Government would be strongly opposed to the introduction of similar legislation in any British colony.

Mr. Rees-Williams: No such reports have reached me, and I see no necessity for any such communication to colonial Governments. In colonial territories, where the British Nationality Act, 1948, establishing a common citizenship for the United Kingdom and these territories applies, no question of passing similar legislation can arise.

Mr. Platts-Mills: That being so, does the Minister intend to wash his hands of this gross manifestation of nationalism and racialism, as though it did not exist in the Empire at all?

Mr. Skinnard: asked the Secretary of State for the Colonies whether, in view of legislation denying full citizenship rights to British settlers in the Union of South Africa, he will take corresponding action aganst Afrikaner immigrants who, in large numbers, have entered and are entering Northern Rhodesia and Kenya.

Mr. Rees-Williams: I would refer my hon. Friend to the reply given to the hon. Member for Maldon (Mr. Driberg) by my right hon. Friend the Secretary of State for Commonwealth Relations on 30th June, which fully explained the position regarding the recent South African legislation; with regard to the latter part of the Question, the answer is "No, Sir."

Mr. Skinnard: Is it not a fact that rather heavy emigration of Afrikaners has taken place, which may alter the whole position of Northern Rhodesia and Kenya and even racial characteristics?

Mr. Rees-Williams: There has been a fairly heavy immigration into Northern Rhodesia, but not quite so heavy into Kenya in the last two or three years, but, also, a large number of people have left those territories.

"Colonial Month"

Mr. Keeling: asked the Secretary of State for the Colonies what representatives of commerce and industry were invited to the official opening of the Colonial Month.

Mr. Rees-Williams: Thirty-five representatives were invited from firms and commercial organisations who were themselves staging special exhibitions or displays as part of "Colonial Month."

International Trade

Mr. Erroll: asked the Secretary of State for the Colonies if the statement that the interests of the United Kingdom and the Colonies are best served by a flourishing and free international market, given on page 43 of Command Paper No. 7715, entitled "The Colonial Territories, 1948–49," represents the policy of His Majesty's Government.

Mr. Rees-Williams: The hon. Member has slightly misquoted the passage to which he refers, and has taken it out of its context. The views of His Majesty's Government in these matters are those set out in paragraph 224 of Command

Paper No. 7715. which should be read as a whole.

Mr. Erroll: Having read the paragraph as a whole and apologising for any misquotations which may inadvertently have occurred, may I ask if the hon. Gentleman will consult with the President of the Board of Trade and the Minister of Supply and get them to re-open the Liverpool Cotton Exchange and the London Metal Exchange?

Oral Answers to Questions — BRITISH GUIANA (U.S. AIR BASE)

Mr. Platts-Mills: asked the Secretary of State for the Colonies if he is aware of the rejection, by the United States authorities, of the claim by employees at the air base, Atkinson Field, British Guiana, for wage increases following upon the ruling by the United States Supreme Court that the American Fair Labour Standards Act is applicable to all persons employed in any military base that has been leased to the United States of America; and what action he proposes to take to safeguard the interests of these British colonial subjects.

Mr. Rees-Williams: No, Sir. I have no information on this matter, but have requested the Governor of British Guiana to furnish me with a report. With regard to the second part of the Question, I would ask the hon. Member to refer to the reply given him on 1st June by my hon. Friend the Under-Secretary of State for Foreign Affairs.

Oral Answers to Questions — KENYA

Land Sale

Viscount Hinchingbrooke: asked the Secretary of State for the Colonies whether he is aware that the Kenya Land Control Board have interfered with a free sale of land by Mr. M. B. Tennent of Kupkegora Farm, Kenya, to African Tea Holdings, Ltd., on the grounds that the latter firm already holds sufficient land, and that the sale price was excessive; and whether he will make a statement on the powers given to, or assumed by, the Kenya Government to control the use of land.

Mr. Rees-Williams: I am asking the Governor for information about this


proposed sale. With regard to the latter part of the Question, I would refer to the reply given to the hon. Member for North Croydon (Mr. Frederic Harris) on 9th February last.

Europeans (Land)

Mr. Skinnard: asked the Secretary of State for the Colonies how many of the 6,000 Europeans entering Kenya for the first time in 1948 have acquired land.

Mr. Rees-Williams: My right hon. Friend is asking the Governor for information, and will write to my hon. Friend when it is received.

Mr. Skinnard: With the answer as to the number will the area of land which has been granted also be given?

Mr. Rees-Williams: indicated assent.

Labour Efficiency Survey

Mr. Skinnard: asked the Secretary of State for the Colonies whether he can now make a statement on reforms arising from the recommendations of the African Labour Efficiency Survey carried out in Nairobi.

Mr. Rees-Williams: The Report is under consideration by the East Africa High Commission and the East African Governments, and my right hon. Friend is not in a position to make a statement at present.

Oral Answers to Questions — MAURITIUS (QUESTIONS TO MINISTERS)

Mr. Sorensen: asked the Secretary of State for the Colonies (1) what developments have taken place in Mauritius in regard to providing houses for the labourers; and whether the desirability of building these near, instead of on, the sugar estates is being borne in mind;
(2) what consideration has been given to the necessity of providing a girls secondary school in Mauritius other than the existing denominational school; how many Indian, or coloured, girls are now receiving secondary school education; and what religious obligations such girls are expected to fulfil; and
(3) what progress is being made in regard to the compulsory purchase of land in Mauritius and a plan of land settlement

to meet the needs of the population particularly in view of the possibility of increased unemployment.

Mr. Rees-Williams: All these are matters falling within the responsibility of the Government of Mauritius which, as my hon. Friend will be aware, now has a Legislative Council with an elected majority. My right hon. Friend is asking the Governor for information on these matters, and will communicate with my hon. Friend when this is received.

Mr. Sorensen: Does that mean that we cannot ask questions of this kind referring to Mauritius in future?

Mr. Rees-Williams: I assume that questions on all these matters can be asked, but there is a limit to the amount of detail which ought to be supplied by the Minister, as a number of these matters of detail are under the control of the local authority.

Mr. Sorensen: Could we have this matter cleared up, Mr. Speaker? I should like to know, for the guidance of other Members, whether we can put down questions of this nature, or if we are prevented from doing so because of the statement which has just been made by my hon. Friend.

Mr. Speaker: If the question is for me, I should like to have notice of it. One is entitled to put down questions, but it depends on how the Minister chooses to answer. He may disclaim responsibility because it is part of a Government which is autonomous, but, if the hon. Member for West Leyton (Mr. Sorensen) will write to me, I would rather give a considered reply.

Mr. R. A. Butler: We on this side of the House would obviously support the view that where a Government which has a degree of responsibility are involved, they must settle their own affairs. As this matter has been drawn to your attention, Sir, we might perhaps give our opinion later.

Oral Answers to Questions — SARAWAK (POLICY)

Mr. Skeffington-Lodge: asked the Secretary of State for the Colonies on what grounds Sir Charles Arden Clarke is being recalled from his appointment in Sarawak and posted to the Gold Coast


before the expiry of the usual term of office; and whether this indicates any change of policy in regard to Sarawak affairs.

Mr. Rees-Williams: My right hon. Friend can certainly give an assurance that his decision to recommend the selection of Sir Charles Arden Clarke as the most suitable person for appointment to the vacancy which has occurred in the Gold Coast implies no change of policy in regard to Sarawak affairs.

Mr. Keeling: Can the Under-Secretary say whether the reason for the change was the desire to have a stronger Governor than Sir Charles Clarke in Sarawak, or the desire to have a stronger Governor than Sir Gerald Creasy in the Gold Coast?

Mr. Rees-Williams: That does not arise out of this Question.

Oral Answers to Questions — ROYAL NAVY

Reserve and Auxiliary Forces

Major Legge-Bourke: asked the Parliamentary Secretary to the Admiralty what were the strengths of the various sections of the Reserve and Auxiliary Forces of the Royal Navy as on 1st January, 1938.

The Parliamentary and Financial Secretary to the Admiralty (Mr. John Dugdale): As the answer consists of a table of figures I will, with permission, circulate it in the OFFICIAL REPORT.

Following is the answer:


STRENGTH OF THE RESERVE AND AUXILIARY FORCES OF THE ROYAL NAVY ON THE 1ST JANUARY, 1938



Officers.
Ratings.
Total.


R.N. &amp; R.M. Retired and Emergency List Officers
8,718
—
8,718


Pensioner Ratings and R.M. Other Ranks
—
29,345
29,345


R.F.R.
—
13,308
13,308


R.N.R.
1,629
7,956
9,585


R.N.V.R.
679
4,874
5,553


R.N.A.S.B.R.
—
1,450
1,450


R.N.W.A.R.
16
500
516


R.N.V.S.R.
1,064
—
1,064



12,106
57,433
69,539

Music (Honorary Adviser)

Mr. Benn Levy: asked the Parliamentary Secretary to the Admiralty who is responsible for official music in the Royal Navy and Royal Marines.

Mr. John Dugdale: The Royal Marines provide the official musicians in the Royal Navy and Royal Marines. I am glad to take this opportunity of stating that they will in future have the help of Sir Malcolm Sargent who has kindly consented to become their honorary adviser in music.

Mr. Benn Levy: Is my right hon. Friend aware that I am delighted to hear that answer?

Vice-Admiral Taylor: Can we be told what constitutes "official music"?

Mr. Dugdale: It is not a reference to the kind of music, but to the occasions on which the music is to be played.

Oral Answers to Questions — POST OFFICE

Opened Letter

Mr. Boyd-Carpenter: asked the Postmaster-General why a letter posted in Birmingham on 27th May, 1949, by Coronet Limited, addressed to R. S. Cappell, c/o Hotel Francia, Paris, was opened by his officers.

The Postmaster-General (Mr. Wilfred Paling): The letter was opened at the request of the customs authorities under the provisions of the Foreign Postal Packets (Customs) Warrant, 1948, Statutory Instrument, 1948, No. 562.

Mr. Boyd-Carpenter: Can the right hon. Gentleman say why this particular letter was selected for this privilege, in view of the fact that it contained nothing except two sheets of notepaper and a pin? Is it a fact that it was selected wholly fortuitiously, or is there any particular reasoning behind the choice of letters?

Mr. Paling: As the hon. Member knows, these foreign letters are opened for the purposes of exchange control; this was done under that authority.

Television, East Midlands

Mr. Sidney Shephard: asked the Postmaster-General when television services will be provided in the East Midlands area.

Mr. Wilfred Paling: The B.B.C. hopes that a television station will be working at Sutton Coldfield in the late Autumn. It is expected that the range of the station will be about 50 miles, and that satisfactory service may be obtainable in favourably situated places outside the normal range. The station will, therefore, provide a television service in part of the East Midlands area.

Mr. Shephard: Is the right hon. Gentleman aware that Nottingham is a far greater distance than 50 miles from Sutton Coldfield? Can he say what steps have been taken to see that a television service is provided for the whole of the East Midlands area?

Mr. Paling: There is a programme for six television stations throughout the United Kingdom, but it may be that places like Nottingham will be able to receive transmissions from Sutton Cold-field, in spite of the fact that it is more than 50 miles away.

Postal Workers (Representation)

Mr. Boyd-Carpenter: asked the Postmaster-General why, by Circular C.68/49, dated 3rd May, 1949, he has instructed his officers to refuse to give a reasoned reply to representations made by associations of postal workers unrecognised by him.

Mr. Wilfred Paling: The purpose of the instruction was to remind controlling officers of what, for many years, has been the normal practice in the Post Office in this matter.

Mr. Boyd-Carpenter: Can the right hon. Gentleman say why, when a reasonable suggestion is put forward, the person or organisation putting it forward should be denied a reasoned reply?

Mr. Paling: It would be a rather big undertaking to give a reasoned reply to every letter of this sort from every organisation, recognised or unrecognised.

Mr. W. J. Brown: May we be assured that the Postmaster-General in this consideration, as in others, has abided by the agreed arrangement governing the recognition of associations in the public service, and is still doing so?

Mr. Paling: Yes, Sir.

Mr. W. R. Williams: Is not it clear to my right hon. Friend from this Question, and several others on the Order Paper, that it is the policy of hon. Members opposite to encourage break-away organisations to try to divide workers in industry so as to make less effective the work of the real trade unions?

Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that my original Question has nothing whatever to do with the subject matter of the last supplementary question? It relates solely to the singling out of one set of associations to be denied the right, otherwise given to all British citizens, of having a reasoned reply from a public Department.

Mr. Paling: I have answered the Question on the Order Paper.

Mr. Boyd-Carpenter: asked the Postmaster-General how many postal and telegraph officer posts within the Post Office are held by members of the National Association of Postal and Telegraph Officers; and what percentage this amounts to of the total number of such posts.

Mr. Wilfred Paling: The National Association of Postal and Telegraph Officers claims to have a membership of 4,765. This represents 21.8 per cent. of the total number of postal and telegraph officers.

Mr. Hollis: asked the Postmaster-General whether he is aware of the claim of the National Association of Postal and Telegraph Officers to represent the required 40 per cent. of the organised staff of the postal and telegraph officer grade; and if he will make a check in order to test the accuracy of this claim.

Mr. Wilfred Paling: I would refer the hon. Member to the answer given to my hon. Friend the Member for Bexley (Mr. Bramall) on 1st July.

Mails, Cyprus

Lieut.-Commander Gurney Braithwaite: asked the Postmaster-General what is now the average period spent by surface mail between the United Kingdom and Cyprus.

Mr. Wilfred Paling: The most recent average transit times of which particulars are available are 25 days for letter and


parcel mails, but I hope that an alternative route recently introduced for letter mails will reduce this time by more than half.

Lieut.-Commander Braithwaite: If I send to the Postmaster-General a statement from an authoritative source in Cyprus complaining that there have recently been delays of seven weeks—that is between the United Kingdom and Cyprus—owing to mails being casually embarked on slow cargo ships, would he be good enough to look into it.

Mr. Paling: Certainly, Sir.

Wireless Licences (Inspection, Herne Bay)

Mr. Baker White: asked the Postmaster-General if he is aware that at 12.15 p.m. on 16th May two plainclothes Post Office officials called at 45, Linden Avenue, Herne Bay, the residence of Miss G. I. Clarke, and asked why she had an unlicensed wireless receiving set; that although they produced no authority to prove that they were Post Office officials, and although Miss Clarke told them that she had no wireless set, they entered the house, threatening Miss Clarke with prosecution if she refused entry, searched two rooms, and departed without apology or explanation; and if he will make a statement on this action by his officials.

Mr. Wilfred Paling: As the answer is rather long, I will, with permission, circulate it in the OFFICIAL REPORT. [HON. MEMBERS: "No, read it now."] I would, however, like to take this opportunity of personally reinforcing the apologies which have been tendered to Miss Clarke for what was a most unfortunate incident.

Mr. Baker White: May I ask the Postmaster-General if the House may be acquainted with the nature of this answer? Does not this disclose a most extraordinary state of affairs, when plainclothes officers, obviously without producing a warrant or card of identity of any sort force their way into a house, search the house—in which there is no wireless, anyhow—and leave without a word of apology of any sort or kind? May I further ask the right hon. Gentleman if the Post Office have powers of search and entry not given to the Police?

Mr. Paling: This is a very long statement. I do not quite agree with some of the points stated by the hon. Member, but it is a fact that one of our officers did make a rather unfortunate statement, for which we apologise.

Mr. Eden: May I make a suggestion? We quite understand that the right hon. Gentleman does not wish to read a long reply now, but could we have it at the end of Questions?

Mr. Paling: indicated assent.

Later—

Mr. Wilfred Paling: On 16th May two Post Office officers engaged in inspecting wireless licences called at Miss Clarke's house. They explained who they were, produced their official cards and asked to see the licence. On Miss Clarke's replying that she had not a set, one officer asked permission to enter. Miss Clarke, who was holding the door ajar, was indignant but, when the request was repeated, opened the door. The officer entered and looked into two ground floor rooms through the open doors, and, being satisfied, returned to the doorstep and apologised for having troubled Miss Clarke. It was at this stage that, in the course of further conversation the officer remarked that a warrant to enter could, if necessary, have been applied for. I am sorry that in this case the officer was mistaken in thinking there was justification for this remark and I deeply regret the annoyance caused to Miss Clarke.
Following a written complaint by Miss Clarke, the Assistant Postmaster of Canterbury called on her to discuss the occurrence and to tender apologies. I should like to add that officers employed on the difficult task of detecting those listeners who avoid their obligations to take out wireless licences are chosen for their tact and good sense, and that the incident complained of is almost unprecedented.

Mr. Baker White: Is the Postmaster-General aware that Miss Clarke was quite emphatic that no warrant of any kind was produced when the men arrived, but that they did attempt to produce what she described as "some sort of paper" when they were leaving? Is the Postmaster-General also aware


that I can send him details of two cases, one from Surrey and one from Kent, outside my constituency, where almost precisely the same thing has happened?

Mr. Paling: I should be glad to look into such cases. The statement in the first part of the hon. Gentleman's supplementary is obviously in conflict with what I have just said. This is the first case of which I have heard in over two years since I have been at the Post Office. This is the first complaint to come to my notice.

Mr. Marlowe: As the right hon. Gentleman has said that these officers are selected for their tact, good sense and, presumably, knowledge of their powers, and as, presumably, this gentleman is obviously lacking in all those capabilities, has he been sacked?

Mr. Paling: indicated dissent.

Captain Crookshank: On a point of Order. Quite irrespective of the merits of this matter, the Postmaster-General asked permission not to read the answer because it was so long. The House protested, and when he did read it, it was extremely short. What protection has the House got, Mr. Speaker, against the Minister shielding himself and using that rather easy way of getting out of something? Have you any power to direct the Minister not to do it again?

Mr. Speaker: No; I have no power. I thought that the House exerted its authority on this occasion and determined that the answer should be read.

Mr. Levy: Further to that point of Order. In the light of my right hon. Friend's reply, is it not apparent that far from shielding himself he was shielding the hon. Gentleman who asked the original Question?

Sub-Postmasters (Pay)

Mr. Hugh Fraser: asked the Postmaster-General whether he is aware that sub-postmasters, especially in small sub-offices, receive an inadequate remuneration; and what action he proposes to take.

Mr. Wilfred Paling: The remuneration of sub-postmasters was revised last year in agreement with the National Federation

of Sub-Postmasters, and I am not aware that it is inadequate. The average minimum payments are now more than two and a half times the pre-war rates.

Crown Office, Eastcote

Mr. Beswick: asked the Postmaster-General if he is yet in a position to say when Eastcote will get a Crown Post Office.

Mr. Wilfred Paling: Assuming satisfactory completion of the lease, I am hopeful that the new office will be open by the mid-summer of 1950.

Parcel Post, Saltash

Mr. Douglas Marshall: asked the Postmaster-General if he is aware that the delivery of parcel post in Saltash, Cornwall, is not until 11 a.m.; that if these parcels are collected by the recipients themselves before this hour they are charged 3d. per parcel; and if he will either deliver these parcels at an earlier time or dispense with the collection charge as this matter is an annoyance to the business community in Saltash.

Mr. Wilfred Paling: I am looking into this matter, and will write to the hon. and gallant Member as soon as possible.

Oral Answers to Questions — TELEPHONE SERVICE

Kiosks, Bedfordshire

Mr. Skeffington-Lodge: asked the Postmaster-General how many new telephone kiosks are to be provided in the next year throughout the country; and what proportion of these has been allocated to Bedfordshire.

Mr. Wilfred Paling: We hope to provide about 3,000 new telephone kiosks during the year ending March, 1950, and of these 1,000 have been allocated to rural areas. The quota for the rural areas of Bedfordshire is seven.

Mr. Skeffington-Lodge: Can my right hon. Friend say why such a tiny proportion of new telephone kiosks is being allotted to the all-important county of Bedford?

Mr. Paling: I assume that it has its proportion in accordance with its population and geography.

Rural Areas

Brigadier Medlicott: asked the Postmaster-General if he will give higher priority than at present for the installation of telephones to farmers and others engaged in the production of food.

Mr. Wilfred Paling: I consider the present arrangements fair, having regard to the needs of other essential applicants.

Oral Answers to Questions — FOOD SUPPLIES

Sweets

Sir Ian Fraser: asked the Minister of Food whether he will now make a further statement about supplies of chocolates and sweets.

The Minister of Food (Mr. Strachey): Not at present.

Sir I. Fraser: Would not the Minister have been wise, before he took sweets off the ration, to have enlarged the ration to see how big the sweet tooth of the nation really was?

Mr. Strachey: The ration was increased before de-rationing took place.

Meat Ration

Mr. Thornton-Kemsley: asked the Minister of Food if the conclusion of the Anglo-Argentine Pact will enable him to increase the weekly meat ration; when, and to what figure.

Mr. Strachey: I am not prepared to anticipate future changes in the amount of the meat ration, but it will, of course, be increased as soon as available supplies warrant it.

Mr. Thornton-Kemsley: Is it not extraordinary and deplorable that after four years of Socialism the Minister can hold out no hope of any increase in the present all-time low record of the ration?

Mr. Strachey: I do not either hold out or refuse to hold out such a hope.

Sugar

Major Guy Lloyd: asked the Minister of Food what is the total of the subsidy on the sugar allocated to sweet manufacture; and what this subsidy represents in the cost of one lb. of sweets.

Mr. Strachey: This sugar is not sub-sidised.

Canned Meat

Major Guy Lloyd: asked the Minister of Food whether he is taking up all the canned meat available from Australian suppliers.

Mr. Strachey: Yes, Sir.

Eggs

Mr. Piratin: asked the Minister of of Food what proportion of eggs is allocated to the ordinary consumer; what proportion to restaurants, hotels and other eating places; and if he will give an estimate of the monthly increase per person which would result if the latter proportion were completely allocated in favour of the ordinary consumer.

Mr. Strachey: Since 27th March, when shell eggs were again issued to catering establishments, 5 per cent. of our supplies have gone to them, 93 per cent. to the ordinary consumer, and 2 per cent. to the Services and ships' stores. The usual seasonal fall in production has now begun and the issues to catering establishments will be stopped on 16th July, except where they have residents. This will give the ordinary consumer one extra egg during the next two months.

Oral Answers to Questions — ROYAL AIR FORCE

Married Quarters

Air-Commodore Harvey: asked the Secretary of State for Air how many officers' and other ranks' married quarters were scheduled for completion during 1949, up to the present date; and how many have been made ready for use.

The Under-Secretary of State for Air (Mr. Geoffrey de Freitas): We aim to complete 2,000 married quarters in the present financial year. No intermediate schedules were fixed. Nearly 1,500 have been made ready for use since last December.

Mr. Basil Nield: asked the Secretary of State for Air what schemes are in operation at Royal Air Force stations whereunder the wives of officers and men occupying married quarters may leave their children in a nursery on the station while they are away and whether such a nursery service is in operation at Sealand.

Mr. de Freitas: There is no official scheme, but at some stations the parents of young children get together and organise a nursery service. There is such a service at the Royal Air Force Station, Sealand. It is open two afternoons a week, and the mothers take turns in supervising it.

Raincoats

Mr. Frederick Lee: asked the Secretary of State for Air whether he will arrange for an issue of light raincoats for summer wear for the Air Force.

Mr. de Freitas: I regret that for financial and other reasons the issue of raincoats to airmen and airwomen is not practicable at present.

Mr. Lee: Would my hon. Friend rather see Royal Air Force men decked out in nice new raincoats than with grubby old groundsheets round their shoulders?

Mr. de Freitas: I do not agree that the groundsheets are grubby or old, but I would much sooner see them with raincoats.

Brigadier Head: Will the Under-Secretary assure the House that the Royal Air Force is capable of producing a good umbrella at the moment?

Volunteer Reserve (Pay)

Air-Commodore Harvey: asked the Secretary of State for Air if he is satisfied with the way in which officers undergoing their annual training in the Royal Air Force Volunteer Reserve receive their pay and allowances; and if he will expedite the payment of these allowances.

Mr. de Freitas: The answer to the first part of the Question is "Yes," and the second part therefore does not arise. If the hon. and gallant Member has any evidence of delay, my right hon. and learned Friend will have it looked into.

Air-Commodore Harvey: How can the Under-Secretary be satisfied when it takes two months to pay the allowances of some of these pilots? Will he look into the matter if I send him evidence?

Mr. de Freitas: Certainly; the evidence we have is that it takes a matter of days. I should like to have some evidence to the contrary.

Medical Supplies

Mr. Swingler: asked the Secretary of State for Air how often medical supplies are delivered to No. 16 Maintenance Unit, Royal Air Force; and if he will investigate the causes of delays in the medical treatment of airmen at this station as a result of periodic shortage of supplies.

Mr. de Freitas: Medical supplies to all Royal Air Force units are delivered when they are required. There has been no delay in the treatment of airmen at No. 16 Maintenance Unit because of shortage of supplies.

Mr. Swingler: Is my hon. Friend aware that medical supplies are delivered to this unit only twice a year, and that if they are exhausted before the next delivery date there is delay in medical treatment? Will he fully investigate the position?

Mr. de Freitas: I am not aware of anything of the sort. There is certainly a routine delivery each six months, but supplies can be demanded in the intervening period when they are required.

Reserve and Auxiliary Forces

Major Legge-Bourke: asked the Secretary of State for Air what were the strengths of the various sections of the Reserve and Auxiliary Forces of the Royal Air Force as on 1st January, 1938.

Mr. de Freitas: The Regular Reserve had 12,000, the Volunteer Reserve 1,000, and the Auxiliary Air Force 2,300.

Surplus Books

Mr. Swingler: asked the Secretary of State for Air if he will take steps to speed up the disposal of books which are unwanted by the Royal Air Force and urgently needed by public libraries.

Mr. de Freitas: Every effort is being made to return to His Majesty's Stationery Office books no longer required by the Royal Air Force, and 103,000 were despatched during the last four weeks.

Mr. Swingler: Can my hon. Friend justify the fact that he is sitting on over one million books? Will he not demobilise some of these books together with the men for whom they were intended?

Mr. de Freitas: That is neither physically nor numerically correct. The number is less than 200,000, and my hon. Friend will see that very soon, at the


present rate, all books we do not require will have been returned to the Stationery Office.

Mr. Swingler: Is my hon. Friend aware that his right hon. and learned Friend told me that there were over one million books now in the possession of the Royal Air Force?

Mr. de Freitas: I am not aware of that. I will investigate the position and see which figure is correct.

Exercises, Norfolk

Brigadier Medlicott: asked the Secretary of State for Air if he has considered the representations made to him by the parish council of Horsham and Newton St. Faiths, Norfolk, concerning recent aerial activity over that district; and what steps he is taking to overcome the difficulties to which his attention has thus been drawn.

Mr. de Freitas: Yes, Sir. A letter has been sent to the parish council setting out the reasons why we cannot do as they ask and stop flying from Horsham St. Faith on Sundays. Sunday flying from this airfield has already been cut down as far as possible and is at present limited to seven or eight Sundays a year, when it is necessary for special exercises and training.

Brigadier Medlicott: Is the hon. Gentleman aware that the constituents upon whose behalf this Question was put raise no objection whatever to the existence of these exercises as such, the importance of which they fully recognise, but feel that, owing to the close proximity of this airfield to the built-up area, residents there have to bear an unfair share of this unavoidable inconvenience?

Mr. de Freitas: It is true that residents there are bearing an unfair share of the unavoidable inconvenience. I very much regret that this training must go on.

Low Flying (Built-up Areas)

Brigadier Medlicott: asked the Secretary of State for Air what regulations at present exist to limit or control the flying of aircraft at low altitudes and the performing of aerobatics over built-up areas.

Mr. Baird: asked the Secretary of State for Air what regulations are laid down for the control of aeroplanes flying low over built-up areas.

Mr. de Freitas: Paragraph 717 and Appendix XXVI of King's Regulations and Air Council Instructions, a copy of which is in the Library, set out the current regulations about low flying and aerobatics by Royal Air Force aircraft. The essential provisions of these regulations, which can only be set aside by an air officer commanding and then only for specific operations in specific areas, are (i) flying is forbidden below 2,000 feet except when taking off, when landing, or when made necessary by weather; (ii) aerobatics are forbidden below 3,000 feet, and, in some circumstances, below 6,000 feet. Offences against these regulations are severely dealt with. The usual punishment for an officer is dismissal from the Service.

Mr. Stokes: Will the Under-Secretary say to whom people should report when they have cause to complain on account of excessively low flying?

Mr. de Freitas: Yes, Sir. They should complain to the Police.

BALANCE OF PAYMENTS

Gold and Dollar Reserves

The Chancellor of the Exchequer (Sir Stafford Cripps): The usual quarterly statement on the balance of payments and its effect on our reserves of gold and dollars is now due and the figures are being published today. For reasons of which the House will be aware—and to which I have referred more than once in recent weeks—it is desirable for me to make al short explanation of the facts set out.
During recent months there has been a decline of business activity in many parts of the world. Instead of a sellers' market, we now have a buyers' market. As we all know, the most difficult problem with which the sterling area has been faced is in its balance of trade and payments with the dollar area. This has been well demonstrated by the critical effect of the dollar shortage upon our sterling economy over the last few years. The decline in demand from the dollar area for sterling area goods naturally brings with it important consequences.
As has already been pointed out on more than one occasion, this change in the financial and commercial climate has meant that the shortage of dollars in the sterling area has become even more marked. As the House is aware from the April and May figures of overseas trade, there has been a considerable falling off in our sales to the U.S.A., and this has reduced our dollar earnings. This decline has been even more marked in the case of other parts of the sterling area, particularly those selling primary commodities to the U.S.A., where both quantities and prices have moved sharply downwards.
It is good to know that our sales to Canada were well maintained in the month of May and that in that month they were very nearly an all-time record. We hope that these exports will be increased still further especially as a result of action taken by industry and by the Government following the visit of my right hon. Friend the President of the Board of Trade to Canada. We are also hopeful that our exports to the U.S.A. will resume their upward tendency. It cannot be emphasised too often that this is by far the most urgent and important task of all those concerned with exports. Success in that task does, of course, also

depend on the willingness of the United States and Canada to accept our exports, and to continue to purchase the raw materials which the sterling area can supply.
As a result of the decline in demand that I have mentioned, our dollar gap has widened again and a new and unfavourable position has developed. While awaiting the figures for the second quarter of 1949, to make its usual quarterly announcement, the Government, in the course of its normal review of the situation, have already taken certain preliminary steps to deal with this situation.
The figures of our dollar deficit, before taking account of E.R.P. assistance, of the Canadian credit, or of drawings on the International Monetary Fund, were in the four quarters of 1948—£147 million, £107 million, £76 million and £93 million. In the first quarter of 1949, the corresponding figure was £82 million. The Economic Survey gave an estimate of £195 million for the first half of 1949, which would have allowed for a dollar deficit of £113 million for the second quarter, as expenditure was expected to increase temporarily in line with our E.R.P. Programme. In the event, however, the dollar deficit for the three months to 30th June has risen to £157 million.
There were no drawings during the quarter from the International Monetary Fund, but, after taking account of £85 million for E.R.P. reimbursement and £7 million from the Canadian Credit, the reserves of the sterling area fell from £471 million as at 31st March last to £406 million at 30th June. There is also a sum of about £20 million owing to us under E.R.P. for goods for which we have already paid. In addition, part of the E.R.P. allocation made to us in respect of the first 15 months of E.R.P. is designed to cover supplies which will not come forward, or be paid for, until a later date.
Though this fall in our reserves is a serious development, yet any comparison with the events of July and August, 1947, would be entirely misleading. In 1947, though our own recovery was under way, we were still in the middle of the process of re-conversion and re-deployment, which had itself been checked by the fuel crisis in February of that year. In


Western Europe as a whole, the economic recovery had made little headway and the political situation was marked by weakness and uncertainty.
Today, as a result of the conclusion of the Brussels Pact, the establishment of the O.E.E.C. and the signature of the Atlantic Pact, our own position and that of the other countries concerned have been immeasurably strengthened. We have behind us in the U.K. two years of expenditure on capital goods on an unprecedented scale, and of uninterrupted economic progress. We have taken a variety of measures to deal with the inflationary situation with which in 1947 we were threatened.
Our production is at a record level in the whole of our history, and our exports are as high as they have ever been and half as high again as in mid-1947. We have practically reached a state of overall balance in our overseas trade. All this has been made possible by the great efforts of our own people and by the generous help of the United States and Canada, especially through the European Recovery Programme, which is so large a factor in the progress that is being made, and will, I hope, enable us to expand European trade in the way that I explained to the House on Monday.
Productive power is the foundation of a country's economic strength, and ours has grown to such an extent in the past two years as to give us confidence that we can deal effectively with the present unfavourable turn in our affairs. But a drain upon our reserves at the present rate calls for immediate corrective action, as well as for longer term and more fundamental measures. His Majesty's Government therefore acted at once in pursuance of what must remain the major objective of our financial policy, the safeguarding of the reserves of the sterling area. Before the middle of June, we had, much to our regret, been compelled by events to give instructions to all our purchasing Departments that they were to postpone new dollar purchases to the maximum extent practicable. That stand-still arrangement will be continued for at least three months and till after the discussions to which I am about to refer. Existing contracts and commitments will remain in force, but specific authority will be required for any new dollar purchases and will only be given

where a clear case of urgent national interest is established. Dollar expenditure, other than on imports, will only be permitted where essential, and then at a reduced rate.
Unless the sterling area succeeds in restoring the volume of its sales to the dollar area, these restrictions upon dollar expenditure will have to be continued. As soon as the distribution of E.R.P. aid for the coming year has taken place and the new intra-European payments scheme has come into operation, we shall get out a new import programme in the light of the circumstances which then exist. We hope to have such a programme completed in September next. Before the discussions to which I will refer in a moment, we do not intend to make any immediate adjustments in the amount of dollar goods released for consumption; but, as soon as they are over, we shall have to reconsider the situation in the light of any decisions reached, and it may then become necessary to reduce consumption of certain selected foodstuffs which are primarily drawn from the dollar area and of certain raw materials.
I must make it clear that, just as it took some time for the position which I have outlined to declare itself, so this standstill will have little immediate effect in reducing the drain on our reserves. Unless contracts already entered into were to be broken, and the flow of imports for which firm arrangements have already been made was to be stopped, there could be no large degree of relief from the present measures until towards the end of the third quarter.
But a standstill on dollar expenditure, though absolutely essential, is no solution for our difficulties. The effect upon our trade relations with the dollar area of the change from an expanding to a contracting volume of world trade demonstrates the need for positive long-term policies. In the meanwhile, His Majesty's Government will press on with every practicable method of increasing our export trade, above all, the sale of goods and services for dollars. And for this it is fundamental that industry itself must quickly achieve a reduction in costs and prices by improved productivity, and give preference wherever possible to exports to dollar markets.
Any inability to hold our own in world markets must deprive us of essential supplies


and our standards of life will suffer. This creates the imperative necessity for new directives to be given to all those in industry who are concerned with costing and securing contracts, that they must increase dollar exports. We must get our export prices down to a point which enables us to improve our position in these markets, and the rather easy methods resulting from the unlimited demand of the last 10 years must go.
The Government and the nation are pledged to a policy of maintaining full employment and protecting our present standard of living. To that end our efforts will be directed, but no democratic Government can do this alone. If a nation is to achieve these generally accepted aims, there must be complete co-operation. While we have no desire to see wages cut, we must and can cut down costs, and this we can do if we increase our efficiency of production. There should therefore be, throughout the Government services and every other public service, and throughout all industry, a resolute aim to achieve the utmost efficiency. In addition, we must avoid waste in materials and in every other way, so as to get the best possible results from what we import.
Above all, it is quite certain that our existing policy on personal incomes, costs and prices will have to be vigorously pursued. I must warn the House and the country that any attempt at this stage to force up personal incomes can only have the most adverse effect upon our situation, since it will raise prices, and thereby make it even more difficult for us to earn dollars or other hard currencies with our exports. This, in its turn, must lead to a diminution of our general standard of living. If our money is to buy us less in goods, an increase in money earnings is of no value. It is of crucial importance that in meeting the present situation we should not aggravate it either by demands for increases of personal incomes or by delays and stoppages in our industry which increase costs and reduce our dollar earnings.
This continuation and intensification of the policies we have been pursuing, though vitally important, will not in itself be enough to remedy our situation. The problem of the relationship between the sterling and the dollar worlds is not one to which the United Kingdom alone can find a remedy. It is a problem in which

our friends and partners in the United States and the Commonwealth are especially involved. Just as we have in this post-war period concerted together short-term economic solutions to our difficulties, and together laid the basis for our long-term political association, so now we must seek together a long-term remedy for the stubborn problems of the balance of trade between the Western Hemisphere and the rest of the world, of which the sterling area forms so important a part.
As soon, therefore, as the facts of this greater stringency of dollars and its effects upon the whole of the sterling area, became evident we invited Commonwealth Finance Ministers to attend a meeting in London. This meeting will begin on 13th July, and its purpose is to discuss the situation as it now exists, and to devise mutual co-operative measures to deal with it. We are taking the opportunity of the visit of Mr. Snyder, the Secretary of the United States Treasury, who will be visiting London this week, to initiate discussions with the United States Government on the whole matter; Mr. Abbott, the Canadian Minister of Finance, will take part in these talks, as well as in those of the Commonwealth Finance Ministers.
Arrangements have thus been made for prompt discussion of the whole position at a high level. The House will realise that until these talks—which will undoubtedly take some weeks—have been concluded, it will not be possible for the Government to formulate and lay before them the full policy which we intend to pursue, in association, we hope, with our American friends and with the other members of the Commonwealth. In the meantime, we shall in the course of these consultations, and in concert with others, take whatever further steps may be necessary to deal with the immediate situation of the sterling area. I would warn the House and the country that a thorough-going solution of this sterling-dollar problem will take some time, and just as in dealing with every other great national problem following the upheaval caused by two world wars, we shall need, while exercising patience, to be prepared to take resolute action.
The United Kingdom carries a great burden of responsibility in this matter, not only as the central country of the sterling area, but also because it is so large a contributor to world trade. We have indeed


fully recognised this responsibility in the assistance which we have provided since the war to stimulate world trade and to help forward world recovery. As the House is aware, we have devoted over £900 million to this cause.
We are convinced that the present circumstances offer a real opportunity for a long-term solution of the difficulties between the dollar area and the rest of the world. Our recovery and that of Europe has, with American and Canadian Governmental help—which cannot be expected to continue indefinitely—gone far enough to enable us now to look for a way out of these difficulties. If in the future we are to have the convertibility of currencies and the multilateral form of trade which we have sought ever since the end of the war, and are now seeking, we and others must begin to build the permanent policies that will make these desirable objectives possible of attainment.
It is therefore in a spirit of constructive determination that we approach the solution of our present difficulties, and if we must pass through a further period of restraint and restriction in order to bring about a more permanent solution of our problems, I am confident that, in so doing, we can rely upon the help and support of all our people thus safeguarding that basic policy of full employment to which we, in common with all other countries of the world, are so deeply pledged, and at the same time preserving the principle of "fair shares" to which our nation is committed.

Mr. Eden: The right hon. and learned Gentleman the Chancellor of the Exchequer has just made to us a statement of the utmost gravity on which I should not suppose that the House as a whole would wish to comment today. We all wish for a chance to read it, to study it and to examine its manifold implications which are none the less grave for the studious language in which they were couched. May I, therefore, first suggest—I think it is agreeable and acceptable to the Government—that we should have a Debate on this subject next week. I think a reasonable date would be Thursday. I understand that is acceptable.
Now may I ask the right hon. and learned Gentleman just one or two questions

which emerge from the immediate statement? First, it will be realised by the House that the right hon. and learned Gentleman's statement is all the graver because it is completely out of line in respect of the balance of payments, with the Economic Survey issued only a few months ago. That is an aspect of the situation which will have to be further examined when we come to debate it.
The other point on which I am anxious to have the earliest information—if we have the Debate next week—is whether the right hon. and learned Gentleman will then be in a position to give us information about the standstill order which, from his statement, it appears was issued before mid-June. The House will understand how important it is that the country should know the effect of that order at the earliest moment, not only its effect on individuals in respect of whatever it is they may have to forgo—I do not know why the hon. Member opposite keeps laughing at me; I am trying to be serious and to deal with this matter with the gravity I think it warrants—but, even more important, in respect of industry and its position with regard to raw materials. It will be recognised that it is quite impossible for anybody to estimate what the effect of that standstill order is going to be.
The only other question I should like to ask the right hon. and learned Gentleman is whether, when he makes an appeal to industry to reduce its costs and prices in order to complete successfully in the markets of the world, and in particular in the dollar markets, he will bear in mind that the heaviest burden which industry has to bear is the continuing, and unhappily still rising, measure of Government expenditure.

Sir S. Cripps: I think the only question which the right hon. Gentleman addressed to me was whether I hoped to be able to give any particulars about the standstill order. I hope that I shall be able to do so.

Mr. Eden: If we are to have a Debate next Thursday, the important thing is that we should have our Debate in the context in which we know all the facts as they are. Today all we know is one figure which has been put out in the Press for many days past, and which has now been confirmed. I hope the right


hon. and learned Gentleman will understand that we are trying to be reasonable about this, and that if we are to have a Debate next Thursday it must be a Debate in which we are in real possession of the facts. Otherwise we cannot advance much further than we have advanced today.

Sir S. Cripps: I was saying that I hoped that we should be able to give more particulars about the standstill order.

Mr. Eden: Hoped?

Sir S. Cripps: I cannot go into the exact amount of detail in which we can do it, but certainly we shall give the House all the information that we can on it.

Mr. Clement Davies: May I supplement what the right hon. Member for Warwick and Leamington (Mr. Eden) has said? I think we all regard the statement which has been made by the Chancellor of the Exchequer as the most important he has yet made while he has held that office. That being so, and inasmuch as, quite obviously, his statement next Thursday, if we have a Debate then, must take quite a considerable time if he is going to explain the figures and the effect of them on the welfare of the country, which depends on his proposals, would it not be possible to have a longer Debate than merely on Thursday? I put it to the Leader of the House that everything else must be secondary to this very important matter, and therefore would it not be possible to have at least two days for the Debate?

Mr. Geoffrey Cooper: Since the Chancellor of the Exchequer indicated that the solution to the problem lay largely in increasing our national efficiency, and since he took great pains to aid industry by his working parties and so forth, with a view to increasing efficiency, is it his intention to take any similar steps with regard to the efficiency of the Departments, to which he also referred? Is it his intention to set up a Royal Commission, or a committee of investigation, or a working party, to inquire into the working of the Civil Service?

Mr. Wilson Harris: When the right hon. and learned Gentleman spoke about the effect of forcing up personal incomes,

was he referring to the whole scale of incomes, high and low, including dividends, salaries and wages?

Sir S. Cripps: Certainly, all those which were included in the White Paper which was issued last year.

Mr. Walter Fletcher: Would the right hon. and learned Gentleman, in any statement that he gives us, deal with the serious question of the big dollar leakage in the sterling area by which large quantities of dollar-earning commodities such as wool, rubber, hides and skins do not produce dollars for the sterling bloc but for other nations outside?

Sir S. Cripps: We can give an estimate. We certainly cannot give the figures, because one of our troubles is that we cannot always discover the facts.

Mr. A. Edward Davies: Our dilemma is that we want to sell our goods in America, but America does not want them. Therefore, if we are to get our goods into America and if we are to appeal to the workers of this country to stabilise wages, is it not a reasonable request, as the French have clearly pointed out, that an examination should be made of the tariff walls which keep our goods out of America? Do we not, in fact, send only a tiny proportion of our exports to America? Further, has not the time come for a re-valuation of the price of gold in relation to our dollar problem?

Sir S. Cripps: There are a number of matters which obviously can be discussed with America, some of which have been mentioned.

Mr. Stokes: May I support the request of the Leader of the Liberal Party to the Lord President of the Council? Will he give us an assurance that we shall have a longer Debate than one single day next week? Will he make quite sure that he does find out through the usual channels, what pressure there is? On the last occasion, when you, Mr. Speaker, had an enormous list, the Lord President was entirely unaware that any back bencher wanted to speak at all.

The Lord President of the Council (Mr. Herbert Morrison): I remember that occasion very well. My hon. Friend is all wrong about it. Quite apart from the physical difficulty of Parliamentary time, which is very real, and although I


appreciate—nobody more—the great importance of the matter, my right hon. and learned Friend will be engaged in conversations with the Commonwealth Finance Ministers. As it is, this Debate will come in the middle of those discussions, and I am sure that the House will appreciate that it would be very difficult for him to give more than a day's attention in the House to this matter. [HON. MEMBERS: "Oh!"] This fact must be faced if those discussions with the Commonwealth Finance Ministers are to be adequately proceeded with.

Mr. Eden: I think we are all glad that the Commonwealth Ministers are coming, but there is the House to be considered, too. We have been extremely restrained in our demand. Will the right hon. Gentleman bear in mind that next Thursday has, in fact, been given up by the Opposition?

Mr. Morrison: I do appreciate that. I have no doubt that the Opposition will also remember it in future negotiations with the Government about time, and it will be a perfectly fair point to advance. We are in a difficulty about the physical limitations between now and the Recess. These discussions with the Commonwealth Finance Ministers must proceed. Their time is limited, and I am sure the House would wish to take their convenience into account as well.

Mr. C. Davies: Is it not correct that the Finance Ministers from the Commonwealth will be meeting the Chancellor before Thursday? Surely we can have an extra day; if we could not have the Friday, could not we have the following Monday or Tuesday? This is such a vital matter that surely the House would not begrudge sitting an extra day upon it, even going into August if necessary?

Mr. Gallacher: Could the Chancellor give some information, either now or when he opens the Debate next Thursday, on two small but very important points? If we have failed to balance our economy in a sellers' market and an expanding market, how can we balance our economy in a buyers' market which is a contracting market? Secondly, when the Chancellor spoke of cutting costs, he said that he had no desire to cut wages. How is it that the subject of wages comes into his mind instead of the subject of cutting

profits? Would he kindly reply to those questions?

Mr. Spence: Could the right hon. and learned Gentleman add anything to what he said this afternoon on the question of the devaluation of the pound? While this question remains unanswered, a great deal of uncertainty is caused.

Sir S. Cripps: His Majesty's Government have not the slightest intention of devaluing the pound.

Mr. Henry Usborne: The Chancellor said that it is necessary to reduce the costs of products in order to sell them. The real cost of products is, or should be, measured in man-hours, which are not increasing. In many factories they are going down. How is it that at the same time the price which has to be charged is going up? Can the Chancellor explain that apparent unbalance which is a great inconsistency and is worrying many people in the country?

Sir S. Cripps: I do not think I can enter into a long economic Debate at the moment.

Mr. Maclay: On the question of Parliamentary time, can it be made clear that to discuss not only today's statement but last Monday's statement and the implications of the Argentine trade agreement, will certainly require a great deal of time? I must emphasise the need for more than one day for these subjects to be debated. Might I add that I sincerely hope that the Chancellor will take time to explain how what he describes as the desirable objective of multilateral trade on the widest scale is possibly consistent with the Socialist theories of the present Government?

Mr. S. N. Evans: Having regard to the very important discussions which will take place between now and the Debate on Thursday next, may I ask the Chancellor whether he will ceaselessly point out to those with whom he is called upon to negotiate that the present financial and economic situation finds an exact parallel with the military situation in 1940? May I ask him to recall to them that had the metropolitan air force been thrown into the Battle of France, the Battle of Britain could never have been won and the war would have been lost? May I ask the Chancellor to explain to


them that the Hurricanes and Spitfires of that desperate period are the dollar and gold reserves of the sterling area today?

Mr. Wadsworth: When the Chancellor meets the Finance Ministers from the Commonwealth, will he give consideration to the problem of large-scale family emigration which is largely a solution of the problem?

Mr. Eden: May I ask the Leader of the House carefully to consider whether we should have two days, and whether it might not be for the convenience of the whole House to divide those two days, and to have, say, the first Debate on the Thursday and the second on the Monday?

Mr. Morrison: I think the right hon. Gentleman knows the difficulties under which we are working. [An HON. MEMBER: "What about the Whitsun Recess?"] Does the Leader of the Opposition want to be controversial? I am not seeking to be controversial and what I suggest—[Interruption]—if the House does not want an answer I will sit down. [HON. MEMBERS: "Give an answer."] Very well, I. will give an answer. What I was going to suggest was that this can be discussed through the usual channels and we will see what can be done. We are in difficulties, but we will see what can be done.

Mr. Platts-Mills: The gravity of the statement we have heard today shows that the Chancellor of the Exchequer is quite incapable, even yet, of seeing that all we have said about the Marshall Plan is being proved true. We protest against these cuts and threats of cuts outlined in the statement.

Mr. Speaker: That is an argument, not a question.

Mr. Platts-Mills: It was leading to a question. May I put a question to the right hon. and learned Gentleman? Will the Chancellor not now acknowledge that what we are faced with, and what is covered by all these long words like "convertibility" and "multilateral trade," is the bitter conflict between British and American capitalism, as a result of which American capitalism is trying to strangle us and squeeze us out of the markets?

Mr. Speaker: The hon. Member goes outside the rules of Questions every time. His question is endeavouring to convey a particular point of view. That is not what is in Order in Questions.

Mr. Platts-Mills: On a point of Order, Sir. In view of the nature of the statement that was made, I understood—and I understood it was the general practice on such statements—that it was the practice to give a certain latitude. Just because the Deputy-Leader of the Opposition says he does not—

Mr. Speaker: Certainly I allowed rather long questions, but they were never conveying a particular point of view. They were never directed as propaganda, and that is what is the trouble with the hon. Member's question.

Mr. Platts-Mills: Further to that point of Order. Is it not implicit in every single question that has been asked——

Mr. Speaker: I will not hear the hon. Member on any further points of Order.

Air-Commodore Harvey: Will the Lord President tell us why he is being so difficult about giving extra time to the House when the Government are proposing to introduce a new Bill to take the place of the Mountbatten Bill, which affects only a handful of people? Surely the Chancellor's statement is a matter of grave importance which affects everybody. Will the Lord President not tell the House, what everybody wants to know, that we shall get the extra time?

Mr. Scollan: May I ask the Chancellor of the Exchequer whether he has now been satisfied that, in spite of all the efforts to capture the American market and open it up for our goods, what is actually happening is the complete collapse of multilateral trade owing to international monetary policies? May I ask him whether, in his meetings with the representatives of the Commonwealth, they will consider the extension of bilateral trading on the basis of goods, commodities and capital machinery?

Colonel Crosthwaite-Eyre: May I ask the Chancellor one question on the gold figures he has produced? It was generally accepted that £500 million was the lowest to which they could fall. They are now £400 million and the Chancellor says that under the standstill agreement a further


large fall is to be expected. Can the Chancellor give an undertaking that His Majesty's Government have some new, revised figure below which they will not allow the reserve to fall and that they are satisfied that such a figure will still be adequate to maintain the sterling area?

Sir S. Cripps: No, Sir.

STRIKE, LONDON DOCKS

The Minister of Labour (Mr. Isaacs): With your permission, Mr. Speaker, I want to make the following statement to the House. The situation at the London Docks has not improved. Accordingly, the Government have decided that in order to safeguard the food supplies of the country, and especially the meat supplies, Service personnel will be used as necessary without delay.

Mr. Eden: I do not suppose that any quarter of the House will wish to challenge the decision which the right hon. Gentleman has taken, but may I ask him whether the Government have any other action in contemplation in respect of this dispute? We have just listened to the Chancellor of the Exchequer's statement, and nothing could be more serious for our export trade than the continuance of this dispute. Do the Government propose to do anything else in addition to putting troops on board to unload food?

Mr. Isaacs: Other action is being contemplated.

Mr. Henry Strauss: May I ask the right hon. Gentleman whether the Government propose to make a Proclamation under the Emergency Powers Act, 1920?

Mr. Gallacher: Mr. Speaker, in view of the serious situation——

Mr. Speaker: Hon. Members should not address me before I call them. The hon. Member for West Fife (Mr. Gallacher) gets up and says, "Mr. Speaker." It is for me to choose; I choose whom to call. If the hon. Member addresses me before I call him, then I shall call someone else. Mr. Brown.

Mr. W. J. Brown: While recognising the normal wisdom of the Government's policy of not using troops to shift cargoes except in the case of perishable foodstuffs, may I ask the right hon. Gentleman, in view of the fact that this dispute centres on something which does not concern a single English docker and is a dispute arising from circumstances in Canada, why he limits the proposed Government action to unloading cargoes of food? Why not unload the lot?

Mr. Isaacs: Because at the moment the necessary thing is to safeguard the supplies of food.

Mr. Gallacher: In view of this very serious situation, why is it that the Minister, instead of sending troops to do the job of unloading these ships, does not order the dock employers to allow the men to unload the ships and leave these two Canadian ships for arbitration or something? The dockers want to unload the ships—is not that true?—and the dock employers will not let them. It is a shameful business. The men want to unload the ships.

Mr. Isaacs: These continued misinterpretations of the facts are doing damage to the country. The fact is this: what the employers said was that they would not employ men to unload other ships coming into the dock until the men had carried out their orders. Following that, men who had accepted work on ships with the insistence of continued employment on those ships until the ships were unloaded, deserted those ships and struck work.

Mr. Sydney Silverman: Does my right hon. Friend think it would be any contribution towards ending a very deplorable situation, if the Service personnel he proposes to employ were employed first on discharging the two disputed ships?

Mr. Isaacs: No, Sir. I do not think that that would help the situation. [HON. MEMBERS: "Why?"] There is not time to deal with that in Question and Answer. The port is being held up because certain demands are made by certain people. Those demands are unreasonable and improper and it is not proper that pressure should be brought on the employers to meet them.

Mr. Boyd-Carpenter: Can the right hon. Gentleman now answer the question put to him by my hon. and learned Friend the Member for the Combined English Universities (Mr. H. Strauss) as to whether or not the Government intend to exercise the powers vested in them under the Emergency Powers Act?

Mr. Isaacs: I cannot answer that question today.

Mr. Piratin: Would the Minister acknowledge the fact that for about three months these two ships were in London docks and that during that time the Dock Labour Board did not press the difficulties of unloading them, and that pressure was brought upon them only about a fortnight ago, since when the dispute has developed? Would the Minister acknowledge that fact, and give consideration to the point made by the hon. Member for Nelson and Colne (Mr. S. Silverman), that if these two ships were unloaded by Service personnel—which was his proposal—the whole matter could be finalised in a few days?

Mr. Isaacs: That just proves the case we have been making. This is a deliberate attempt to hold up the business of this country, and we are not going to stand for it.

Mr. Platts-Mills: Does the Minister not see that he is trying to force British workers to act as scabs for the whole world?

Mr. Isaacs: The hon. Gentleman, with his association with scabs, ought to be able to answer that question better than I can.

Mr. Mellish: Would my right hon. Friend not agree that it is a shocking thing that the Communist Party, of all parties, should ask that troops should unload disputed ships?

BILL PRESENTED

HOUSE OF COMMONS (INDEMNIFICATION OF CERTAIN MEMBERS) BILL

"to indemnify John Burns Hynd, Esquire, John James Robertson, Esquire, and Albert Evans, Esquire, from any penal

consequences which they may have incurred under the Succession to the Crown Act, 1707, the House of Commons (Disqualification) Act, 1782, or the House of Commons (Disqualifications) Act, 1801, in respect of certain matters arising before the passing of this Act, and to remove any disqualification for membership of the House of Commons so incurred by them," presented by the Prime Minister; supported by Mr. Herbert Morrison, the Chancellor of the Exchequer, Mr. Ede, the Attorney-General and Mr. Glenvil Hall; read the First time; to be read a Second time Tomorrow, and to be printed. [Bill 165.]

BUSINESS OF THE HOUSE

Proceedings in Committee on Housing (Scotland) [Money] (No. 2) exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. H. Morrison.]

Motion made, and Question proposed,
That the Finance Bill, as amended, may be considered immediately after the recommittal of the Bill and report thereof, notwithstanding the practice of the House as to the interval between the various stages of such a Bill."—[Mr. Herbert Morrison.]

Captain Crookshank: I should have expected the Leader of the House to make a statement on this Motion, which, after all, is rather unusual. Although it is rather unusual, I think I am right in saying a similar one was moved last year. I want only to make the point that I hope that this is not to be considered a precedent, and that I hope that the well-established usage for dealing with the Finance Bill by specific stages is not to be abrogated by the moving of a Motion like this year after year. I do not want to discuss the matter at length, but if the Leader of the House could give us that assurance, that this is a very exceptional case, and that we are not going to take this action again, I shall be satisfied.

The Lord President of the Council (Mr. Herbert Morrison): We fully recognise that this is an exceptional instance, and we would not wish the House to regard it as a precedent.

Question put, and agreed to.

Orders of the Day — FINANCE BILL

Order read for consideration, as amended.

4.5 p.m.

Motion made, and Question proposed.
That the Bill be recommitted to a Committee of the whole House in respect of the new Clause (Duration of dog licences) standing on the Notice Paper in the name of the Chancellor of the Exchequer."—[Sir S. Cripps.]

Captain Crookshank: This Motion arises out of the previous Motion. I should like to point out, if I may be permitted, that this is a result once again of the unfortunate change in our Budget procedure, by which the Budget Resolutions are not discussed on consideration. The right hon. and learned Gentleman dissents from that view, but I can assure him that any sufficiently skilled person could have raised the question of dog licences but for that. It was, in fact, done at a subsequent stage by a new Clause, but had we had full discussion on consideration of the Budget Resolutions, that might not have been necessary.
I want to mark once again the fact that we do disapprove of this new Procedure. I should have thought that the Chancellor would have been the first to accept my point of view, considering that during the Committee stage of the Finance Bill so many matters were raised that will have to be further discussed today, and on the next day on which we deal with the Bill. Had we had the discussions earlier, they might have been cleared up then. I think it is just as well to put that on record.

The Chancellor of the Exchequer (Sir Stafford Cripps): I do not think that even the right hon. and gallant Gentleman would have thought of this one, so far as any Financial Resolution was concerned. This is a small concession to the dogs. We are trying to give everybody a turn in this Finance Bill. We hope it may be for the general benefit of those who keep dogs. If the right hon. and gallant Gentleman wants to oppose the Motion, he can, of course, do so.

Question put, and agreed to.

Bill immediately considered in Committee.

[Major MILNER in the Chair]

New Clause.—(DURATION OF DOG LICENCES.)

Any licence taken out under the Dog Licences Act, 1867, after the beginning of the year nineteen hundred and fifty, shall be in force from the time it is taken out until the expiration of the period of twelve months beginning with the first day of the month in which it is taken out:

Provided that this section shall not be taken as preventing the licence from being suspended under the Protection of Animals (Cruelty to Dogs) Act, 1933, or the Protection of Animals (Cruelty to Dogs) (Scotland) Act, 1934.—[Mr. Glenvil Hall.]

Brought up, and read the First time.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I beg to move, "That the Clause be read a Second time."
I need say very little in moving this Clause. The Committee will remember that we dealt with this last week, when I indicated on behalf of my right hon. and learned Friend that we would at this stage of our proceedings insert a new Clause into the Bill which would implement the undertaking I then gave on his behalf. It will be noticed by the Committee that we have, in the words that have been put down, implemented what I then undertook to do, with the exception that there is nothing here about the certificates which are issued by justices of the peace for sheep dogs. We think that that may, perhaps, wait. We have not had time, in the short interval that has elapsed between our proceedings last week and now, to consult justices of the peace on this matter, and it may well be that they may prefer to continue to give those certificates, as they do now, in the early part of the year, rather than have their work spread over the whole of the 12 months. Apart from that, I think it will be agreed that we have implemented the undertaking we then gave.

Mr. Symonds: I tried to intervene when this matter was raised before, but because of the pressure of time I subsided. I should like now, on behalf of all those of all parties who are interested in animal welfare, to thank my right hon. Friend for meeting our wish in this generous and effective way. In a way, it was easy to grant, in that it involves little, if any, loss to the Exchequer. I suggest that it may well mean an increase of income, because


what has happened so far is that a person has had to decide at the end of about six months whether or not to keep a dog or turn it adrift. People will now have a longer period in which the dog can become house trained, and, therefore, more likely to command affection. After six months one's memory may not be so good. Therefore, I suggest that this may mean more revenue than before. So, on behalf of all those who are interested in this matter, I express thanks for this new Clause.

Captain Crookshank: We had no doubt, after the assurance given at an earlier stage, that this Clause would appear. In fact, it is one of the two terrific concessions to our Debates by the Chancellor. We have not reached the other one yet.

Sir S. Cripps: By the Financial Secretary.

Captain Crookshank: Does he not speak for the Chancellor? I was under the impression he did. He gets the credit for the very small things, I quite agree. However, this is a useful change from the point of view of the Post Office, because it spreads the work at the counter over a longer period. Anyone who has been in touch with that Department knows that at the beginning of the year there is a great rush of business, which one would like to reduce as far as possible, because the staff always have had inevitably a tremendously difficult time during the Christmas period. Anything that the Chancellor, or anyone else so far as that goes, can do to reduce the strain of work in January for the Post Office servants is of importance.
I have grave doubts whether or not this will have any effect on the revenue because presumably the citizens are law-abiding and will take out the licences regularly as they fall due. I do not see how, in the long run, unless the dog population increases tremendously, there can be any advantage to the revenue. I was a little surprised when the right hon. Gentleman said that they had not been able to deal with the question of sheep dogs for whom licences have to be applied for to the magistrates.

Mr. Glenvil Hall: They are certificates of exemption for sheep dogs and not licences.

Captain Crookshank: I am sorry if I put it the wrong way round. I was surprised that he had not been able to deal with the sheep dog situation. I know that is a question of getting exemptions and that these exemptions have to be obtained from the magistrates. I can quite understand that in the short time given us this year between the Committee stage and the Report stage of the Bill, owing to the Whitsun Recess, that he obviously has not had time to consult every one concerned; but presumably he is going to have consultations and that at some time another necessary change will have to be made. I suggest that when he consults the magistrates he should also do so on the question of whether this is a matter for the magistrates at all. It seems unnecessarily troublesome that benches of magistrates should have to deal with the exemption of sheep dogs; this is a matter which might be left to the police to deal with.

Mr. Leslie Hale: May I interrupt to say that in the district with which I am acquainted, the procedure is that the police make a formal, collective and comprehensive application to the bench for sheep dog exemptions? That may not apply anywhere else, but I suggest that if it does not, it is a useful procedure to follow. The police check up on the sheep dogs and make one single application to the bench, which is granted almost automatically.

Captain Crookshank: Why waste the time of the bench even to that extent? When the Police are making out the lists, why should not they be the authority to deal with the exemptions? I put that to the right hon. Gentleman for further consideration. I agree with the hon. Member for Oldham that we do not want to add anything unnecessary and cumbersome in these days. Therefore, as there is time to consider the matter, perhaps the right hon. Gentleman will inquire into that point. We on this side of the Committee welcome this change, and I do so particularly because I am certain that it will bring some small measure of relief to the hard-worked Post Office servants at a time of the year when they need it most.

Mr. E. P. Smith: I feel sure that the Committee will agree that this is a commonsensical Clause which might have been introduced many years ago. I


would ask the Chancellor of the Exchequer whether he will consult with his right hon. Friend and colleague, the Postmaster-General, to see whether it is not possible for dog licences to be issued at every post office. In remote rural areas one may have to go six miles to a post office to obtain a dog licence, although there may be a sub-post office in the village. It would be a great convenience to everyone if every post office could issue a dog licence.

4.15 p.m.

Mr. David Eccles: I do not think that we ought to allow this Clause to go without asking the Government whether they have looked into the point raised by the hon. Member for Woodbridge (Mr. Hare). The hon. Member has had great experience of local government, and he suggested that this new proposal would mean much more work in reminding people to take out licences. Have the Government looked into that question, and are they satisfied that the additional work devolving on the local authorities will not be considerable? I was glad to hear the right hon. and learned Gentleman say that he had a concession for every one, starting with the dogs. We shall later ask for a concession for the "vermin," and I hope that he will give it.

Mr. Charles Williams: I think that it would be wrong if those of us who took part at an earlier stage in the discussion on this matter of dog licences did not thank the Chancellor of the Exchequer, or the Financial Secretary who made this change, for this small crumb which is the only thing that has fallen to us in the whole of the Committee stage of the Finance Bill. For that reason, I welcome this change of the 12 months' period for the issue of the licences, and I think that, on the whole, it will be a considerable help to Post Office workers. Whether it will also help the police, who have some difficulties in this matter, I do not know, but perhaps before we part with this Clause we may have some information as to what consultations have taken place with the police on this matter.
It will be remembered that when we were dealing with this proposal at an earlier stage, a suggestion was made that,

instead of licensing a dog for one year, it should be licensed for its life. I should have thought that would have been a pretty fair gamble in these days, and if an owner took out a licence for, say, six years, the Government would get immediately quite a considerable amount of revenue. It would be possible, I think, for me to move an Amendment to alter the time from 12 months. We should ask the Financial Secretary whether he has considered that proposal. A dog might be licensed for five or eight years or whatever the estimated life of a dog is considered to be.
That would result in getting a nice little sum in taxation at the present time and, possibly, in the future do away with a great deal of administrative work. I see that an hon. Lady opposite is receiving that suggestion with obvious pleasure, and perhaps she will be prepared to support it. The other matter to which I wish to call attention is the proviso. I am not certain where we stand with regard to it, although I realise it is necessary to have it. I should like a little further explanation of what is done under it.

Miss Colman: I am not expressing pleasure at the hon. Gentleman's proposal. I should like, as I put down a Clause on the Committee stage, to add my thanks to those of my hon. Friend the Member for Cambridge (Mr. Symonds) to my right hon. Friend the Financial Secretary for the trouble which he has taken in this matter. I can assure him that he will have the gratitude of dog lovers and dog owners everywhere.

Mr. Frederic Harris: Speaking from a local government point of view, I shall be perfectly frank in saying that I do not particularly agree with this proposal. I should have thought that if every dog had to be licensed on a certain date of the year, not necessarily January, it would be easier from the administrative point of view. The more we can cut down administrative work the better, and it would help if the Financial Secretary could tell us whether he has had a word with local authorities about this. I feel rather strongly on the matter, and I believe that the local authorities will react unfavourably to this proposal, because it creates unnecessary work.

Lieut.-Colonel Sir Thomas Moore: In answer to the question asked by the hon. Member for Chippenham (Mr. Eccles), I would point out that in the old days when notifications were sent round to tell people that the licence was due, the dog owner invariably renewed the licence. During the war, when that practice was stopped, dog owners forgot, and were taken up to the courts and fined. That happened in my own case. I am therefore all in favour of the suggestion that an annual notification should be given to the dog owner, who might be a very busy man and may not remember that on 1st January, or whatever the day may be, he must send in a cheque for his dog licence. I hope that the provision for notification will be retained in this new Clause.

Mr. Glenvil Hall: I shall certainly bear that point in mind. Reminders for the renewal of wireless licences are, of course, sent out automatically. That does cause a certain amount of work, although it is of great convenience to the licence holders. I suppose almost every hon. Member has had cause to be grateful for a reminder about the renewal of wireless licences.
We shall also bear in mind the point made by the hon. Member for Ashford (Mr. E. P. Smith). In a sense, it is not for me to say; it is a matter we shall have to discuss with my right hon. Friend the Postmaster-General to see whether it is possible for that suggestion to be implemented. For my part, I should like to see it happen. No one likes to have to walk five or six miles to pay 7s. 6d. to take out a licence. It must be pointed out, however, that most people who live in villages go to their nearest town occasionally, and they could combine the taking out of a licence with other business. However, I will put the suggestion to the Postmaster-General and see what is his reaction to it. Knowing him as I do, I am positive that if it is possible to do it he will.

Mr. C. Williams: Will the right hon. Gentleman also examine it from the point of view of those in very remote districts? It would be an enormous help in country districts everywhere—in Scotland, Wales, and Cornwall. It is easy for people living in cities, where everything is close at hand, but it would be an immense advantage to those living in remote

districts if this suggestion could be adopted.

Mr. Glenvil Hall: I shall certainly call my right hon. Friend's attention to this Debate, and I am sure he will read it and consider the views now expressed by the hon. Member for Torquay (Mr. C. Williams), who also suggested that a dog might, as it were, take out a life membership; that is to say, a licence should be issued for the duration of the life of the dog. When we discussed this question before and he raised this same point, it was pointed out that the licence is not issued for a particular dog named Toby, or whatever it may be; it is issued to an individual to keep a dog. If the dog dies during the year the licence does not die with the dog, but goes on. That would, I think, prevent his suggestion being adopted, and I am afraid I can hold out no hope to him that that can be considered.
The main point made has been whether we have consulted local authorities. As I indicated the other evening when this matter was raised, time has been very short and it has been impossible to discuss this with local authorities. I am sorry that that has been so. However, we have done what we could to get in touch with associations representing local authorities, and up to the moment there appears to be no real feeling against this on the part of local authorities. I should say, in fairness, that the London County Council have been to see me, and I have discussed the matter with them. They are a little fearful whether this will not mean more work for them in the years ahead. It is impossible to say whether or not it will mean more work. We can only wait and see and judge by experience what effect it has on the work of local authorities.
I think their real fear is that it may lead to greater evasion. I can hardly imagine that it will mean a great deal of extra work, even in the office, because the same number of licences will be taken out during the year. Although under the new system the licences will gradually be spread over the whole 12 months, the number on the register will be the same, or thereabouts; it will be spread over 12 months instead of appearing in one month. As I see it, the volume will be much the same, because we changed the system as from next year, 1950, not now,


and the great proportion of dog licences will be taken out in January, so that the change will only take effect over a period. I can assure both those hon. Members who have asked these questions and the local authorities that we shall watch this over a period to see what effect it has on both the revenue of local authorities and the amount of work which will fall upon them. Apart from that, I think everyone is agreed that this is an excellent reform, and one which we should implement if we can.

Mr. R. A. Butler: Could the Financial Secretary apply his mind to the other side of the argument, namely, the possibility of attaching a licence to a man, and licensing dog ownership for the man's life? That might relieve a great deal of the administrative difficulty. I do not know whether his Department have any actuarial calculations about this, to show whether it would work.

Mr. Glenvil Hall: If we did that possibly some bright individual would start issuing insurance policies to dogs in order to insure the lives of their masters.

Mr. C. Williams: When I raised the question of licences for longer periods—

The Chairman: That point is really out of Order. I gave the hon. Gentleman an opportunity of raising it in a word or two, although it is really quite out of Order at this stage.

Mr. Williams: The point I wish to raise is whether the period could, be changed from 12 months to, say 60 months. Is that out of Order?

The Chairman: I am afraid it is out of Order on the ground that it might involve a charge. I could not therefore allow any Amendment to be put forward, so that this matter cannot be discussed. In the hope that it might be the shortest way home I did allow the hon. Gentleman to raise the matter, but I am afraid we cannot have any further discussion on it.

Mr. Williams: I am perfectly willing to put it from this point of view: that the period should be extended but for the same price. May I argue it from that point of view? I think the cost of collecting is so high that ultimately it

would pay the Chancellor to give one licence once and for all. From that point of view, I very much regret that the opportunity has not been taken to give people the chance of taking out a licence for a longer period, or else a licence for a particular dog. It will be very difficult to make these points at any other stage, and I wish to put them forward now, because since the Exchequer has had its mind concentrated on this it might be a good thing to try to make this provision more practical.

Mr. Oliver Poole: The Financial Secretary said he had not consulted local authorities because he had not the time to do so between the Committee and the Report stages. If that is the case, it seems almost intolerable that the Government, not having themselves had time for full consultation on their own new Clause, with the full weight of their Department behind them, should expect the Opposition to be able to discuss this important matter, and I wish to register my protest.

4.30 p.m.

Captain Crookshank: I want to make one point. Amid the pæan of praise for the freedom of the dogs, we must not lose sight of the fact that what the right hon. Gentleman has just announced is a very minute concession indeed. In point of fact, existing holders of dog licences do not get any advantage whatever. The licences, owing to their having been bought on 1st January, will always have to be taken out on 1st January. Therefore, the only people whom this affects at all are the people who are now not dog owners but who at some future time get a dog. Is that right?

Mr. Glenvil Hall: Not necessarily.

Captain Crookshank: I should like to have it quite clear. My impression of what the right hon. Gentleman said is that there will not be any great release of labour, because the only people who will benefit are those who will take out a dog licence for the first time, and that licence will run from the time when it was originally taken out, and will be repeated on that date each year.

Mr. Glenvil Hall: Not altogether. To a certain extent, the people who have now got to renew their dog licences will be renewing them in January, because


they will fall due then. I am told that the average life of a dog in London is about eight or nine years. If someone in London gets a dog now, probably it will die within a given period.

Captain Crookshank: It is a certainty.

Mr. Glenvil Hall: That being so, that individual will either not have another dog or he will buy a pup. That pup will have a free run of six months. Therefore, that individual will take out a licence not on 1st January, but at some period during the year. That being so, the longer this reform runs, the more people there will be taking out licences at other dates in the year than in January.

Captain Crookshank: I am much obliged to the right hon. Gentleman, but it does not clear up the question I was putting to him. The right hon. Gentleman has a dog which lives for eight or nine years. It is not a question of its probably dying; it will certainly die at the end of a certain time, unless the right hon. Gentleman has discovered some extraordinary breed which the fate of human nature does not touch. I forget what the right hon. Gentleman called his dog on some previous occasion, but we will call it Toby. Toby dies in August, and as I understood from what the right hon. Gentleman said in his second or third intervention, the licence goes on until 1st January. Then he tells us that he will probably buy a pup. The puppy will be covered by that licence until 1st January, and on 1st January he will renew the licence. He will go on renewing the licence on 1st January for eight or nine years. Is that right, because that is what I understood from the right hon. Gentleman's speech?

Mr. Bechervaise: It does not necessarily follow that all dogs die in August.

Captain Crookshank: There is something about a dog's day, but I do not think that that is necessarily connected with its mortality. The right hon. Gentleman once having had a dog, he would always have to license it on 1st January, and other people are in the same position. If a dog dies in the middle of the year and the owner gets a puppy, the licence carries over until 1st January, when it must be renewed. What I was trying to point out was that the concession is an

extremely small one, because it can only arise in the case of some relative of the right hon. Gentleman or any other dog owner who never had a dog but who decides to keep one. If he gets it in July or August and takes out a licence then, the renewal of that licence will take place in July or August. Therefore, the concession really applies to all future owners of dogs, because all existing owners of dogs, owing to the fact that their licences are not connected with a particular dog but with doggery, will have to go on renewing them on 1st January. In spite of all the congratulatory speeches made, this concession does not really amount to anything at all, except that in future the people who acquire dogs during the course of the year will have those licences renewed at a particular day.

Miss Colman: A puppy does not have a licence for six months.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

Bill reported with an Amendment; as amended (in Committee and on recommittal) considered.

New Clause.—(AMENDMENT OF RATES OF ENTERTAINMENTS DUTY.)

(1) As respects payments for admission to entertainments held on or after the thirty-first day of July, nineteen hundred and forty-nine, Part II of the Fifth Schedule to the Finance Act, 1943 (which sets out the full rates of entertainments duty), shall have effect, and be deemed always to have had effect, subject to the following amendments:—

(a) the eightpenny halfpenny rate of duty shall apply only where the amount of the payment referred to in the first column of the Schedule exceeds elevenpence and does not exceed one shilling and a halfpenny (instead of where it exceeds tenpence halfpenny and does not exceed one shilling and a halfpenny); and
(b) instead of a sevenpenny halfpenny rate applying where that amount exceeds eight-pence three-farthings and does not exceed tenpence halfpenny there shall be—

(i) a sevenpenny rate, to apply where that amount exceeds tenpence and does not exceed elevenpence; and
(ii) a fivepenny rate, to apply where that amount exceeds eightpence three-farthings and does not exceed tenpence.

(2) Where entertainments duty has been charged on any payment made before the said thirty-first day of July, and by virtue of this


section the duty should have been charged at a lower rate than that at which it was in fact charged, the person by whom the duty was paid shall be entitled to repayment of the amount of the overcharge.—[Mr. Glenvil Hall.]

Brought up, and read the First time.

4.37 p.m.

Mr. Glenvil Hall: I beg to move, "That the Clause be read a Second time."
This implements an undertaking which I gave on behalf of my right hon. and learned Friend the Chancellor of the Exchequer when we were in Committee on the Finance Bill last week. It reduces the Entertainments Duty on the cheaper seats, and enables the cinema exhibitors and others to whom the full scale of duty now applies to re-price a proportion of their seats at 1s. 3d. At present scales, it is uneconomic for a cinema exhibitor to do so. It is expected that this will help a number of exhibitors who own smaller cinemas, and who face difficulties because of a recent rise in prices and because of a recent agreement giving substantial increases in wages to their employees. As those who read the Clause will see, it is proposed to bring the new scale into operation on 31st July next.

Mr. C. Williams: I wish to say a word about this Clause. It goes part of the way to help the small cinema owners rather than the big ones. The small owner is facing considerable difficulties because of increased prices and greater wages, and particularly is that so in the smaller towns. These people will benefit from this concession. This concession is one which has really been brought about by the foresight of the Conservative Party, and by the method in which they have put pressure on the Treasury and on the Government they have helped small owners throughout the country who are facing difficult times.

Mr. R. A. Butler: I have to thank the right hon. Gentleman on behalf of my hon. Friend the Member for Northwich (Mr. J. Foster). The new Clause shows that it is a point which has appealed to the Government and they have accepted it.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

New Clause.—(EXEMPTION FROM ENTER TAINMENTS DUTY OF AMATEUR ENTERTAINMENTS.)

(1) Entertainments duty within the meaning of section one of the Finance (New Duties) Act, 1916, shall not be charged on payments for admission to any entertainment which is held on or after the thirty-first day of July, nineteen hundred and forty-nine, and consists of one or more of the following items, that is to say—

(a) a stage play;
(b) a ballet (whether a stage play or not);
(c) a performance of music (whether vocal or instrumental);
(d) a lecture;
(e) a recitation;
(f) an eisteddfod;

where the Commissioners are satisfied that the entertainment is provided by a society, institution or committee which is not conducted or established for profit and that the entertainment is an amateur one.

(2) For the purposes of this section an entertainment shall not be deemed to be an amateur one if any payment is made or reward given for the appearance of any of the performers whose words or actions constitute the entertainment or any part of it, or for any person's services in connection with the entertainment as instructor, producer, manager or conductor or in any advisory capacity.

(3) This section shall be deemed always to have had effect and where entertainments duty has been charged on any payment made before the said thirty-first day of July, being a payment which by virtue of this section is not chargeable with duty, the person by whom the duty was paid shall be entitled to repayment of the amount of the duty.—[Mr. Glenvil Hall.]

Brought up, and read the First time.

Mr. Glenvil Hall: I beg to move, "That the Clause be read a Second time."
In Section 8 (1) of the Finance Act, 1946, it is provided that Entertainments Duty shall not be charged, on certain types of entertainment where it can be shown to the satisfaction of the Commissioners that it is given by a society, a committee, or an institution, not conducted for profit and whose main objects are partly educational. Experience has shown that amateur societies sometimes find it difficult to get exemption on charity grounds under the Finance Act, 1924, because their takings are insufficient to allow them to provide an adequate sum for charity, or on educational grounds under Section 8 (1) of the Finance Act, 1946, because the production is almost purely entertainment and


technically cannot be considered to be partly educational.
The proposed new Clause provides as an alternative condition that those taking part in the performance shall not be paid. The matter has created a good deal of interest. My hon. Friend the Member for Oldham (Mr. Hale), who is a neighbour of mine, is very anxious that something should be done. Other hon. Members in whose constituencies amateur societies are growing in number, will be aware of the difficulties. Parliament should, if possible, assist those societies to carry on without having the burden of Entertainments Duty thrust upon them. It is my belief, which I feel sure is shared by other hon. Members, that in agreeing to the Clause we shall help the societies and be fulfilling the wishes of a great majority of hon. Members. The cost is not expected to be large. We estimate it at no more than about £10,000 a year.

Mr. E. P. Smith: It is most satisfactory that any concession should be given to the purveyors of dramatic entertainment, and I particularly welcome the remission of tax in respect of wholly amateur entertainment. Some people might say that the fact that it is an amateur show is a sufficient strain upon the audience without the Treasury mounting the camel as well. Most amateur performances are educative, both as regards the audiences and the players; and they are generally designed to benefit some charity or some good purpose as well as to brighten social life in the rural and urban areas. I am sure that the amateur societies in the country will welcome this measure of relief, and are very much obliged to the Chancellor. The cost of the Clause may be very much greater than £10,000, because there are about 10,000 amateur societies. I very much suspect that the right hon. and learned Gentleman will have to dip more deeply into his pocket than for a mere £10,000.
The wording of the proposed new Clause is, however, peculiarly clumsy and unhappy. If we look at subsection (1) we find certain types of entertainment specified, including stage plays and ballet. I would very much welcome a technical explanation from the Chancellor or from the Financial Secretary as to when a ballet becomes a stage play and when

it does not. What is the point of putting such a definition to a ballet? Amateur ballet performances are rare, and we should be pleased to see more than we do. The Clause goes on to mention, after stage play and ballet:
(c) a performance of music (whether vocal or instrumental);
(d) a lecture;
(e) a recitation;
(f) an eisteddfod;
What is the position of a mime? There are a number of miming societies in the country. What is a mime? It is not a stage play, nor a ballet, nor a performance of music, nor a lecture nor a recitation, and it is most certainly not an, eisteddfod. What is the position of a puppet show? There are amateur puppet societies. Is a puppet show to be subject to tax when everything else named is exempt? The possibilities of this implication have not been fully explored.
4.45 p.m.
We find in subsection (2) that "for the purposes of this section" the entertainment shall not be deemed to be amateur
if any payment is made or reward given for the appearance of any of the performers whose words or actions constitute the entertainment or any part of it"—
I agree with the subsection on this point, but it goes on to say:
or for any person's services in connection with the entertainment as instructor, producer, manager, or conductor or in any advisory capacity.
Now it is well known that the best amateur companies employ for a small remuneration a professional actor to produce them. That is one of the advantages of amateur acting. Why are they not to be allowed to have one? It will reduce the educative value of the performances, and it will deprive the professional, often in need of it, of a certain amount of employment, and that must be wrong. There can be no sense in that. What has it to do with whether the entertainment should pay a tax or not?
When professional companies were exempted from Entertainment Tax it was because they were non-profit making and partly educational; and now the Financial Secretary has said that amateur societies will be excluded only if they are nonprofit-making and amateur. Yet the provision of a professional producer or coach clearly in itself would give them a partly


educational value also. This prohibition in subsection (2) of the Clause should be omitted. Otherwise, on behalf of the amateur stage, I welcome the Clause.

Mr. Keeling: I am a tiny bit surprised—not piqued, but surprised—that the Financial Secretary, in introducing the new Clause, did not mention that I have a rather similar new Clause on the Paper. As the Government's Clause was not put down until the eleventh hour I cannot help thinking that my Clause had something to do with it. I do not want to look a gift horse—in so far as it is a gift horse—in the mouth. To the extent that the Government's proposed new Clause goes, I welcome it.
The present rule, that a society, in order to get exemption from tax, must be partly educational, or that its performances must be educational, has given rise to absurd anomalies. A society in Torquay was refused exemption for its performances of the new "Vagabond King," but a neighbouring society was granted exemption. I hope that I am not stealing the thunder of my hon. Friend the Member for Torquay (Mr. C. Williams). Perhaps I may pat him on the back: thanks to his representations the Torquay Society was eventually exempted. Again, exemption was granted to a London Society for its performance of "The Geisha" on the ground that it was educational, but another society could not obtain exemption for the same work. A London bank society obtained exemption for "Goodnight, Vienna," but a different London bank society failed to obtain exemption for "Merrie England." The new Clause, where it applies, will be free of such absurdities.
There are, however, two faults in the new Clause. The first is that only six classes of entertainment have been specified and several deserving ones have been omitted. My Clause sought to give exemption to those six and to two others, one being a film. If a stage play and a ballet, why not a film? My Clause also sought to give exemption to exhibitions. If a lecture, why not an exhibition?
The second fault is more serious. As my hon. Friend the Member for Ashford (Mr. E. P. Smith) has pointed out, subsection (2) bars from exemption any entertainment where any payment is made or reward given to an actor, producer, instructor, manager or conductor. It is

a very frequent custom for an amateur theatrical or operatic society to bring in and pay a conductor or producer or even a star. The fact that such people are brought in immensely increases the educational value of the entertainment and it does not in any way destroy the essentially amateur nature of the performance.
I suggest that the Government take back this Clause and, before the second day of the Report stage of the Bill, bring it in with a very simple alteration; or they might prefer to accept a manuscript Amendment now. I suggest that in line 16 of subsection (2), for "performers" should be substituted "members," and in the following line for "any person's services" should be substituted "any member's services." That would bring this Clause into line with what I suggested in my Clause, and the effect would be that a society would be free to bring in one or two professionals for the essential purposes of the performance but would not be permitted to pay any of its own members.
Owing to heavily rising costs which they are unable to meet by putting up the prices of the tickets, some societies are having a very hard struggle for existence, and I cannot believe that the Government wish them to die, but some of them certainly will die unless provision is made on the lines I have indicated, for persons outside the societies to be employed for specific purposes.

Mr. Leslie Hale: It would not be fair to allow the Clause to pass—I hope it will pass and will not be withdrawn at this stage—without a word of thanks from this side of the Committee, particularly as this Clause virtually accepts a Clause standing in my name. [Laughter.] I do not know why there should be so much laughter when I call the attention of the Committee to the fact that a Clause in my name dealing with this matter stands on the Order Paper. It is a good deal in advance of that in the name of the hon. Member for Twickenham (Mr. Keeling). I would certainly have called attention to the fact that he had put down a Clause and given due credit for initiative. No one wishes to deprive him of the occasional bits of glory he may earn in the midst of many matters with which I disagree.
I am sorry that the acceptance of the Clause by the Opposition has been a


little grudging. The Clause is drawn in very wide terms and it makes it possible for an amateur society to apply for repayment of tax already paid if it can establish its case. There is, however, a very real point to be raised. I am not concerned about societies who want to employ stars. I see no reason why they should have exemption or why they should want their stars. I do not see why an amateur society performance should not be an amateur performance. We want to encourage small societies in the villages where the annual operatic performances are part of the local life and provide very real enjoyment and social opportunities and thus do very useful work.
The Clause leaves out the many amateur societies in the large towns who have been in the habit of employing coaches. The object of the amateur operatic society is to raise money for charity, provide an annual entertainment for the people and give families an opportunity of seeing their friends and relations taking part in these sometimes very fine performances. Oldham has a quite exceptional society—probably the Financial Secretary will know it—which gives most magnificent performances yearly in which the standard of acting—I emphasise this to the hon. Member for Ashford (Mr. E. P. Smith)—compares very well with the standards of professional acting which I have seen in many areas. In order to do that, the Oldham society normally engages a professional coach, and it is good that it should do so. One of its objects is to provide training to improve the standard of dramatic or operatic presentation, and the professional coach is part of the machinery normally used by the society.
There are now to be two tests, and we are very grateful to the Chancellor of the Exchequer and the Financial Secretary for what they have done. This very important concession will be welcomed on all sides of the Committee. Even if a society has a coach, if the production is educative it is exempt. If one has a coach for Strindberg, presumably one is exempt, and to take an example from my side of the Committee, if one has a coach for George Bernard Shaw one is equally exempt.

Mr. E. P. Smith: The hon. Member has missed the point. I said that the employment of a coach by an amateur society was in itself an educative thing to its members.

Mr. Hale: I fully agree. I am trying to differentiate between the cases put by the hon. Member for Ashford and the hon. Member for Twickenham. I believe that the employment of professional actors is going too far. I think that the employment of a professional coach should not make it impossible for the Oldham Operatic Society this year again to produce "Rio Rita," which, I gather, might not be regarded as educative by some authorities but which I found to be instructive, morally beneficial and artistically presented. As the employment of a coach is a matter of opinion, perhaps the Financial Secretary will consider giving effect to this point of view administratively where one obviously has a bona fide amateur society desiring to employ a professional coach for the presentation of a bona fide amateur performance.

5.0 p.m.

Mr. O. Poole: I rather hoped that the right hon. Gentleman would have been able to satisfy us before I spoke. I add my plea to that of my hon. Friend the Member for Ashford (Mr. E. P. Smith). I have some slight personal interest in this matter in that I am a governor of the Old Vic, and one of our main but lesser known activities is by touring companies to encourage an interest in the living theatre. We want to encourage people all over the country to visit the theatre in places where normally they have only been accustomed to go to a cinema, where in many cases the films are of no great artistic merit.
I wish to put an additional point. I agree entirely with the remarks which have been made that we ought to do, nothing to discourage paid producers, most of whom receive quite small remuneration. If professional producers are engaged the standard of the performance given is so much higher that those who attend will be more encouraged to come and see the living theatre. Unfortunately, there are not nearly enough places in the country to which the Old Vic and Young Vic touring companies are able to go, and where the people have to rely on amateur companies,


many of which, as the hon. Member for Oldham (Mr. Hale) has said, reach a very high standard. They would not reach anything like that high standard if they did not engage paid producers. In view of the great support which the Government are giving to every activity of the drama, and particularly to what we of the Old Vic are doing, I hope that they will reconsider this matter.

Mr. W. R. Williams: I, too, would like to add my plea to those which have already been made in this matter. I shall make it in a twofold capacity. I do so firstly because of the tremendous activity which is going on in my constituency of Heston and Isleworth in the field of drama, art, music and community association work. In order to perfect the amateur producers in the respective arts it is necessary on occasion to bring in the professional man or some professional men to whom some fee has to be paid in order to ensure a production of the high quality and high standard which the society concerned desires to present. I feel sure that my constituents would regard it as very unreasonable if, by utilising the services of one or perhaps two professional conductors of music or coaches or trainers or perhaps an instrumentalist in a particular performance, that would of necessity put the entertainment outside the scope of this Clause. So far as my constituency is concerned, and having regard to the activities which are going on there, it would be a harmful thing if -the Clause were approved in its present form.
I wish to refer to the part of the country where I was bred and born and brought up, and where possibly as much has been done in the past, and is being done at present, in connection with amateur performances as in any part of the country. I was bred and born in Carnarvonshire, and from my earliest days I have most pleasant recollections of the great work which has been done in connection with oratorios, musical and dramatic performances, eisteddfods, etc., and in later years in connection with the drama. I doubt whether any part of the country has progressed more rapidly in regard to the dramatic art in recent years than has the Principality. In all these activities it is essential, in order to perfect the

respective arts, that the organisations concerned should utilise the services of one or perhaps more professional men.
I remember that when I was a boy we were trying to build up a good musical society, which included a brass band. For many years there was a tremendous struggle to make that band into a decent unit and then someone had the brain-wave of asking a noted cornet soloist from Manchester, Angus Holden, to come along and train the band. In a short time there was a tremendous improvement in its performance. The same kind of thing is going on in these days in some of the small villages around the quarries of Carnarvonshire. I am sure that it is not the desire or wish of the Chancellor to discourage that form of perfection in these various arts by denying to these small societies the right to have a specially skilled and trained assistant or coach.
I remember, as no doubt other Members of this House who have connections with Wales will remember, the oratorios performed there from time to time. Welsh singers and their choral attainments were second to none but it was usual, and I think it is still the usual practice, for the soloists to be engaged from some of the academies and for payment to be made to them for their performance. That has not only added to the achievement of the society but has been something to which the choristers themselves have looked forward as enabling them to hear how these great musical works should be performed. With all these considerations in mind my right hon. Friend may wish to communicate to the Chancellor the general desire in the House to do everything possible to encourage the true amateur society to have the assistance of professional or semiprofessional people.

Viscount Hinchingbrooke: I think that, by now, the Parliamentary Secretary may be conscious of the fact that this Clause is not altogether as polished as it might be. He only introduced it at short notice last night, and I suspect that he now probably acknowledges the source of inspiration as being my hon. Friends the Members for Twickenham (Mr. Keeling) and Torquay (Mr. C. Williams). All the same, he should have given the matter deep thought and brought before the House


a Clause which completely covered the subject. I find deficiencies of substance in each of the subsections; reference has been made to many of them. The list of entertainments is not sufficiently comprehensive. It should include exhibitions, mimes, puppet shows and anything else of that kind.

Mr. W. J. Brown: But not political speeches.

Viscount Hinchingbrooke: Certainly not those by the hon. Member for Rugby (Mr. W. J. Brown). I should have liked to find in the Clause a definition of the word "profit." Apparently any organisation which is conducted or established for profit is not to qualify. All of us would agree that if there was an elaborate financial structure, with directors, expenses, shareholders, etc., and the organisation set out to make a profit, we should not want it to be associated with this remission of Entertainments Duty. But what is the position of an amateur society which has at the end of the year a balance in the bank of some hundreds of pounds in excess of the balance in the bank at the end of the previous year? Is such an organisation not to qualify? It might be quite genuinely amateur, and have a little pool or fund for expenses. Has it to distribute that somehow to its members, or not charge so much, so that it has no finance of any kind, or has the the same amount of floating balance at the end of each year? These are matters with which the right hon. Gentleman should deal in saying whether such an organisation is to be regarded as a profit making one or not.
In regard to subsection (2) I support the views which have been expressed by some of my hon. Friends and by the hon. Member for Heston and Isleworth (Mr. W. R. Williams), that some aspect of professionalism is important. Like other hon. Members I have in my constituency a very remarkable organisation—in Weymouth—whose activities were noticed in "The Times" the other day. Seven or eight different societies all collaborated in a very big week-end festival under the auspices of the municipality—an operatic society, a gramophone society, and so on, all of which did some remarkable work. Many of these constituent elements employ the services of professionals to improve their

technique. Here is a genuine amateur organisation, admittedly on a large scale, but which is rather important, now doing just the kind of work the Financial Secretary has praised, and in respect of which he has brought in this Clause to assist, but yet, because of this professional aspect, they are not to be allowed to remit Entertainments Duty.
I hope the right hon. Gentleman will not concentrate this Clause upon the little village organisations which carry on their work entirely unassisted. We do not want to concentrate entirely on what might be called the completely amateur, the arty-crafty type of show, but to give people who witness these spectacles some uplift, some interest and some genuine entertainment. If the assistance is to be given only to the very small and inexperienced village organisations, I do not think it goes far enough.
Finally, I ask the Financial Secretary whether he does not think that subsection (3) is entirely out of line with other legislation of the same kind? It provides that any past entertainment expenses can be reclaimed by any society which can prove it falls within the purview of this Clause. That is retroaction in excelsis. We might well find Victorian pageant organisations, still with some nucleus committees, seeking to claim back from the Government tax paid for many years past, so that the Treasury may well become involved in difficult and technical investigations. I think there ought to be a limit, perhaps of seven years, in respect of which people may make claims. Perhaps a limit applies automatically, in which case I shall be glad if the Financial Secretary will indicate it.

5.15 p.m.

Mr. A. Edward Davies: I am grateful to the Chancellor of the Exchequer for having brought forward this new Clause. There is much to be said for the point of view of Members on both sides, who are asking my right -hon. Friend to provide that where an occasional visit is made by a conductor a society or organisation will not be precluded from the benefits of the Clause. It is a good thing in these times of artificial entertainment to encourage people to provide entertainment for them-selves as far as possible. I assume that the Government want to give some help to the small societies, not the arty-crafty


people mentioned by the hon. Member for South Dorset (Viscount Hinchingbrooke), in the large industrial areas who find it very pleasant to do some dramatic, choral work, or instrumental work. If that is the idea, then I think it is worthy of support.
In the area from which I come, North Staffordshire, we have many amateur choral societies where people from factories come together week by week and produce, in due time, a magnificent performance of choral singing or an oratorio. For that purpose it has been found useful from time to time to have the services, which have been readily forthcoming, of distinguished musicians, for example, Sir Malcolm Sargent and other distinguished artists, to advise and occasionally to conduct a performance. It would be a pity if artists who are willing to come forward in circumstances where, for the most part, the work of producing a musical concert or a dramatic performance is principally a matter of occupation for working-class people precluded societies or organisations from the benefits of this Clause, although there may be some difficulty in providing suitable words to draw a line between the amateur and the professional.
On the question of profits, suppose that working-class men and women decide for their own entertainment to produce a play or choral concert in support of a charity or hospital. Obviously, they will aim at making a profit as well as covering their expenses. They will hope to raise a substantial sum of money. Are they, in these circumstances, to lose the benefit of this Clause? These, I suggest, are reasonable proposals we are making, and I hope that if it is possible my right hon. Friend will meet us; if he does I am sure he will be doing a service to the country as well as responding to the requests which have been made from both sides.

Lieut.-Commander Gurney Braithwaite: There is little doubt that the Government have made a great effort here to do the right thing, but, as so frequently occurs in the House of Commons, discussion has uncovered certain obvious defects in the drafting of the Clause. I am not going to follow those who have stressed some of the difficulties of educational definition. The Financial Secretary will recall that when the Finance Act, 1946, was passing

through the House we found some very curious results, the fact that "Charley's Aunt" was educational and "Julius Cæsar" was not. I want to pass from that, and come to what might be described as the schedule in subsection (1), which is not sufficiently extended. One obvious omission is that of historical pageants, for which in the boyhood of many of us there was a great vogue. I notice that one or two pageants were held during the summer, such as the one in the City of St. Albans. Here is something which might well be brought within the scope of the Clause.
The hon. Member for Oldham (Mr. Hale) and others have very properly stressed the importance of making provision for the professional coach or producer so often employed by amateur societies in bringing forward their productions. But there is another aspect of the matter which also should be considered. I imagine, for instance, that in Oldham, which is a large town, they have very little difficulty in casting a Gilbert and Sullivan opera, but in smaller towns one frequently finds that the amateur operatic society cannot cast from its members one of the important characters. What frequently happens is that they advertise in magazines read by people interested in this sort of thing to the effect that there is a vacancy in such and such a production for such and such a character.
I remember that a society in one small town which was producing "The Yeomen of the Guard" failed to find from among its own members anyone properly qualified to take the important part of Jack Point, around whom the scene so largely revolves. So the society advertised in a magazine and found an enthusiastic gentleman from Staffordshire who was prepared to travel every week for three months to Somerset to take part in rehearsals. He was an amateur in the truest sense of the word, but the society thought it proper to pay his railway fare for the rehearsals, although he received no remuneration for his performance when the play was produced. Yet the fact that the railway fare had been paid would exclude the society from subsection (2).

Mr. L. Hale: He seems to have been playing not "Jack Point," but "Jack Point-to-Point."

Lieut.-Commander Braithwaite: That was the point of my remarks, that there was no payment or reward. The railway fare would be a payment as opposed to a reward if he received some sort of emolument from appearing in the production. I suggest that there is another obvious anomaly here which the right hon. Gentleman might look at.
I want to support the suggestion of my hon. Friend the Member for Twickenham (Mr. Keeling) that this discussion has revealed a case for a revision of the wording of this Clause, and as we do not take the Report stage of this Bill again until next week, I would urge upon the right hon. Gentleman that, with the aid which I am sure will be readily forthcoming of his skilled and learned Law Officers, he should have another look at this Clause in the light of this discussion. There is no doubt in my mind as to what the Government desire to do, but the discussion has disclosed that the Government are failing to do it in this Clause.

Mr. C. Williams: I agree with my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) that this Clause is helpful but ill-drafted. There are several points I would like to see covered. For instance, the Welsh word "Eisteddfod" is used. My name has been borrowed largely from Wales, and I am glad to do anything to help that country, but I am also interested in Cornwall where they have what is called a Gorsedd. We have had this matter raised on the Floor of the House before, and no doubt my hon. Friend the Member for Bodmin (Mr. D. Marshall) will support me when I say that it should be included here, for it is the same kind of entertainment and is of high educational value. The only difference is that, naturally, it is much superior in every way to the Welsh form. We are in some difficulty because my hon. and learned Friend the Member for St. Ives (Mr. Beechman) is ill. These festivals often take place in his Division, and we are unfortunately represented in Cornwall by two Socialist Members who do nothing here.

Mr. Deputy-Speaker (Mr. Bowles): The hon. Gentleman must keep much closer to the Clause.

Mr. Williams: I was about to say, Sir, that I would have asked for their support

if I had had any hope of getting it, as I have asked for support in what I hope will be an Amendment to this Clause from my hon. Friend the Member for Bodmin. However, I certainly will not pursue that point, because they are leaving that county at the end of this Parliament.
My next point deals with the words "performance of music (whether vocal or instrumental)." I am not sure what is the technical definition of "instrumental." For instance, are wind bagpipes included? Undoubtedly they should be as music. I want to know if that definition includes wind instruments of that kind, since I know what the Treasury can be and I know what lawyers can be? If there is a wrong combination of Treasury officials and lawyers they may interpret this phrase to mean that a fiddle is included but that all wind instruments are not included because they are not instrumental—since one can hardly say that blowing is instrumental. So, I want the Financial Secretary to be quite certain that "instrumental" does include all wind instruments such as bagpipes.
While the right hon. Gentleman is considering the Cornish and Welsh institutions, I hope he will also consider whether Highland games should be included as well. [Interruption.] The hon. Gentleman who has interrupted must not prevent me from trying to reduce what I have to say on this occasion. May I go on from that to the last subsection, which was objected to by my noble Friend the Member for South Dorset (Viscount Hinchingbrooke)? I had noted this subsection some time previously, and I want to know how far back we can claim. As the hon. Member for Twickenham (Mr. Keeling) said, the Clause probably referred originally to certain Torquay, Paignton and Brixham Societies—three societies in my constituency that are well known—about which I have had a volume of correspondence with the Financial Secretary and the Chancellor.
I welcome the concession made today because previously some have been taxed and others not, for absolutely no reason. There should be a reasonable limit within which they will be able to claim repayment. Indeed, I hope that the Treasury will write to the societies concerned and say that they are entitled to claim a


rebate and that it will be made quickly because there have been hard days for some of these societies. I see from the smile which has crossed the face of the right hon. Gentleman that I have now gained his approval, so I hope he will look carefully into the point about Cornwall and the other point about what are musical instruments. The difficulty about having a new Clause at this stage is that one cannot follow up these matters and is dependent, unfortunately, on the fact that the Financial Secretary can do very much what he likes.

5.30 p.m.

Mr. Nigel Birch: My hon. Friend the Member for Torquay (Mr. C. Williams) very rightly referred to bagpipes as musical instruments. That may be a perfectly good description of them, but I think he would get more assistance for his performances in Cornwall if he did not go out of his way to insult Wales and Scotland.

Mr. Williams: I have never insulted Wales. I said that their performances were not as good as those of Cornwall. Everyone cannot be at the top, but I think that Wales are at least the second or third best.

Mr. Birch: I think we had better leave the matter there. I should like to support what the hon. Member for Heston and Isleworth (Mr. W. R. Williams) was saying. He spoke about musical performances in Wales, and I think I am right in saying that he once lived in the town of Mold, in Flint. I should like to give an example of what might happen under the Clause. In Mold last week there was a music festival, which I attended for three days. Part of it was an eisteddfod and part of it an oratorio. I have no doubt that in the eisteddfod the accompanist and adjudicators were paid. In the oratorio the soloist and accompanist were certainly paid. On the other hand, it was in effect a completely amateur performance.
In events of this kind there is almost bound to be some form of professional assistance. I may be wrong, but I should imagine that under the Clause the eisteddfod would not be penalised because of this. On the other hand, as the Clause specifically mentions "an eisteddfod," there must be some doubt

about it. By a strict interpretation of the Clause it would be very difficult to apply it to include an eisteddfod, because so long as any payment is made to the accompanist or to the adjudicators it could not be claimed to be free of Entertainments Duty.

Mr. W. J. Brown: The House is in such a state of happy unanimity about the Clause that I do not want to disturb the delightful atmosphere which prevails. I join, therefore, in the praise of the Government for the concession they have made, and I join with other hon. Members in asking them to improve it. There are three points, it seems to me, upon which the Clause could be improved. The first is that we do not want to subsidise the unentertaining entertainments while we penalise the good entertainments; and if, in fact, we say to a society, "If you are helped by a professional you shall not get the relief, but if you come on in all your crude amateurishness, unrelieved by any sort of professional assistance at all, you will get relief," we are subsidising, probably, the bad performance and penalising the good. That is absurd and we ought not to do it. That is the first point.
On the second point, we ought to be clear about the question of profit. We are inclined to get into a muddle on this subject. Very often Members talk in this House as if anybody who makes a profit is a rapacious capitalist, but that if anyone makes a loss it shows how inefficient private enterprise really is. Subsection (1) of the Clause refers to:
a society, institution or committee which is not conducted or established for profit.…
What happens if by accident the body concerned makes a profit? Does it then exclude itself from the provisions of the Clause, or is the difficulty here to depend not upon what happens but upon the purpose of what happens? In that case, the words "the purpose of" had better be inserted to make the Clause perfectly plain, because it is not plain as it now stands.
As regards the third point, there must obviously be some limit to the retroactive effect of subsection (2). I was reminded the other day that the Royal Exhibition of 1851 has not yet been wound up. It still has offices in London, nearly 100 years after the exhibition was held. I do not know, without some little research,


whether any form of entertainment tax was in vogue in 1851. I think it is improbable, but if there did happen to be some form of entertainments tax, then, under the Clause, the ghost of that defunct exhibition of 1851 may arise and confront the Treasury of 1949.

Mr. Hale: It would be worse still if the Window Tax had been in force.

Mr. Brown: I rather think it was repealed before 1851. There is a real point for saying there ought not to be indefinite retroactive effect. Whether the right period is five or ten years I do not presume to say, but plainly it ought not to be indefinite. I suggest that the Government put right the Clause in the three respects I have mentioned. I shall then be happy to assure them of my support when it comes back in the proper form.

Mr. Douglas Marshall: I rise to make only three points, one of them in support of my hon. Friend the Member for Torquay (Mr. C. Williams). I am glad to see that the Chancellor has now returned. The first point concerns the inclusion of the gorsedd in the same way as the eisteddfod. In our discussions about two years ago the Chancellor at that time immediately agreed that these two were one and the same thing for the purpose of taxation, and he should have no difficulty in taking the same line on this occasion.
My hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) mentioned the question of the historical pageant. That rather worried me, for I cannot think that the intention of the Chancellor in drafting the Clause would be to exclude the historical pageant. There are many hon. Members who will share my view that such a pageant plays a great part and can be of great importance in the village or town by which it is staged. I can almost say that I declare a personal interest, for I have always wished to see a historical pageant at Restormel, which is near where I live.
My last point, which concerns subsection (2), has been referred to already by several of my hon. Friends. Any hon. Member acquainted with rural areas and their different operatic and dramatic societies knows perfectly well that from

time to time a professional singer or other artist may take part in the entertainment, but only for quite a short interval between scenes, and for only a small fee. I cannot imagine that because of this the Chancellor wishes to exclude that kind of show from relief from taxation simply because one person makes an intervention as part of the show and happens to be paid. That would be a great pity and not within the spirit or the intention underlying the Clause. I sincerely trust that the Chancellor will take note of these three matters and give us his assurance that they will receive his sympathetic attention.

Mr. R. A. Butler: I should to sum up our views on this side of the House. The Clause is a distinct advance, and all credit should go to my hon. Friend the Member for Twickenham (Mr. Teeling) and to the hon. Member for Oldham (Mr. Hale). The position as we see it is that the Clause ought to be withdrawn and reviewed in the light of the constructive criticism which has been made. This constructive criticism has been put forward by the hon. Member for Ashford (Mr. E. P. Smith) and by other hon. Members. It may be that the right hon. and learned Gentleman will be able to still all the anxieties that have been expressed, but if not, the best thing to do would be to recommit or submit the Clause again at our next session, so, that we may be satisfied that this considerable advance does, in fact, meet the needs of the situation.
The difficulties we have seen are, first, that the list in subsection (1) is not necessarily complete. It does not cover, as has already been mentioned, such things as mimes, puppet shows, pageants, films or exhibitions. I should like to ask a further point: are we satisfied that the opening words of the Clause—
Entertainments duty within the meaning, of section one of the Finance (New Duties) Act, 1916"—
limit the type of lecture which may be given? It would be very damaging if the Commissioners had to decide upon a society which otherwise satisfied the conditions of this new Clause but proceeded to put on amateur lectures which were highly controversial and yet, according to law, were susceptible of being relieved of Entertainments Duty. If the right hon.


Gentleman will turn his attention to that point and see that only such a lecture as is non-controversial and is entertaining can be relieved, he would satisfy us.
The next point is the question of having assistants, producers and others, and the words of subsection (2) say "in connection with the entertainment." I want to be clear whether if the society has a normal course a producer or, in a separate category, a secretary not actually in connection with the entertainment, it would be possible for the society to have such a person attached to it, if that person's services were attached to that particular entertainment. Those words leave a certain ambiguity and I should be grateful if the right hon. Gentleman would clear them up because amateur societies will study this very closely and they will be puzzled by these words in regard to people permanently associated with a society running an entertainment not for profit, but as an amateur venture.
On the question of retroactive effect, I think the words
This section shall be deemed always to have had effect
give a sort of perennial tone to the Clause which is attractive, but alarms those of us who exist as M.P.s to look after the needs of the taxpayer. I should like the right hon. Gentleman to turn his attention to the arguments addressed to him with a view to allaying our fears that an undue burden shall not fall on the taxpayers by this new Clause. I hope he will give serious attention to what has been a constructive Debate and that he may decide to improve the Clause, in which case we shall always be indebted to him.

Mr. Glenvil Hall: I can only speak again with the leave of the House, but I understand that the House would wish me to deal briefly with the main points which have been raised in what has been, as the right hon. Member for Saffron Walden (Mr. R. A. Butler) said, an interesting Debate. I am sorry if I did not pay due tribute to the hon. Member for Twickenham (Mr. Keeling). It is true that he had a Clause on the Paper and that I mentioned the Clause my hon. Friend the Member for Oldham (Mr. Hale) had on the Paper. That was partly because my hon. Friend was sitting near

me and I could see him and also, and more important, because the latter proposed new Clause is the one which my right hon. and learned Friend has more closely followed.
The hon. Member for Twickenham complained—and that complaint was taken up by other hon. Members—that we have not included films and exhibitions in subsection (1) of this new Clause. We excluded both for obvious reasons. This Clause aims at helping amateur performers, and a film cannot be said to come within that category. It would be quite inappropriate in a Clause which was to help living performers if we included films. Exhibitions are provided for in previous Finance Acts and I can assure the hon. Member that they are covered. There is no point in providing for them here in this new Clause.
The hon. Member suggested that we might get over the provision we have inserted for a very good reason—that no one taking part should be paid—by inserting words indicative of the fact that, provided a person was not a member of the society, he could be paid. The difficulty there would be that a member would only have to resign temporarily from the society to be able to be paid and, when the performance, or performances, were over, he could rejoin and in that way he would drive a coach and horses through the provision. If we are to do anything in the way of permitting certain kinds of payment, the suggestion made by the hon. Member would not be the appropriate method.
5.45 p.m.
The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) dealt with an instance known to him where someone in the Midlands travelled all the way to Somerset at weekends to help in an amateur dramatic performance and the hon. and gallant Member asked whether under this new Clause that man would be permitted to have his fare refunded, or if he would have to bear it out of his pocket. I can assure the hon. and gallant Member that the wording of this Clause would not catch a man who undertook to make such a journey. He would not be having his income increased in any way, but would simply be getting a refund of out-of-pocket expenses. I have taken advice


on this point and I can assure the hon. and gallant Gentleman that that is the view held by the Customs and Excise.
A number of hon. Members on both sides of the House, including the hon. Member for Ashford (Mr. E. P. Smith), my hon. Friend the Member for Heston and Isleworth (Mr. W. R. Williams) and my hon. Friend the Member for Oldham, indicated that in their view the Clause is too tightly drawn in that no one can get payment in any way for helping a performance which might take advantage of the Clause. I tried to make it clear when introducing this Clause that we have had to take into account, as I hope the House will, the fact that there are already on the Statute Book fairly wide provisions for helping organisations of all sorts and here all we are doing is to close a gap and to help the small society in a village or small town.
We are not here trying to help the bigger societies in large cities or towns who are financially able to employ a leading actor to take part in a performance, or to get a coach from London to oversee the performance. We are dealing with the small dramatic society and I want the House to realise that under existing provisions an amateur operatic or dramatic society, even in a small village, which got an actor from London, or wanted to pay a coach, could take advantage of the present provisions of the law. In most cases they would be giving what is known as a cultural entertainment and the present conditions are very wide for an entertainment which could be described as partly educational.
Nevertheless, I realise the strength of feeling which has been expressed, and my right hon. and learned Friend is very anxious to make the Clause worthwhile if it is accepted by the House. During the coming year, or whatever period may be necessary, he is very willing to watch the situation to see whether the Clause is of any real help, or whether the very stringent conditions to which attention has been called prevent the Clause helping societies which he desires to help. At the moment I think the House should accept the Clause as it stands. It is one more provision to help the small cultural society in the provinces to provide entertainment for their own members and friends without feeling that the Entertainment Duty prevents them doing so.
The hon. Member for Ashford was quite wrong when he suggested that a mime or puppet show would not be caught up in the definition of subsection (1). The definition is not new. We have lifted it—not altogether, because certain categories have been left out and the hon. Member for Twickenham drew attention to them and I have answered him—apart from films and exhibitions and things like that, from the provision in the Finance Act, 1946. The wording is well understood by those who watch these things, and are interested. The kind of entertainment to which he has drawn attention has always been considered to be covered. Where the present provisions on the Statute Book have been called in aid, they have covered entertainments of that kind. In addition, the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) mentioned historical pageants. If an historical pageant is staged for charity it is covered already. If it is done in order to show a town its history, again it is cultural, and already covered. If, however, it is put on as a commercial venture, say at Olympia, then it should and ought to pay Entertainment Tax.

Mr. E. P. Smith: I do not wish to delay the right hon. Gentleman, but as he did refer to the specific things which I mentioned, namely, mimes and puppet shows, would he tell me, from (a) to (f), under which definition they come?

Mr. Glenvil Hall: They come, quite definitely, under the definition of a stage play.
The hon. Member for Rugby (Mr. W. J. Brown) and the hon. Member for South Dorset (Viscount Hinchingbrooke) wished to know the definition of the word "profit" and drew attention to the wording:
… not conducted or established for profit …
There again these words, by long usage, are well understood by those who have to interpret these particular Clauses in Acts. This form of wording goes back at least to 1923, and has been administered up to now without any difficulty. I think therefore that the House will agree that we all know what we mean by those words. The plain meaning and construction put upon them, which will be continued to be put on them, is not that a


dramatic society ought not to make a profit, or aim at making a profit. The test will be whether the performance is put on as a commercial venture, aiming at the making of a profit. If it is not so put on it will be caught up under the Clause and can benefit under it.
A point made by several hon. Members was what is actually meant by subsection (3) of this new Clause. It has been assumed that anyone who at any time has paid Entertainment Duty for a performance which is caught up by this Clause can now, straight away as soon as this Clause becomes law, reclaim the Entertainment Duty which was paid. That is not so. All we are doing here is to use a form of words common in provisions of this kind. We are providing, as we have to do, for what is known as advance bookings; where someone has paid for a ticket in advance and the performance will not take place until after this Clause, if accepted, becomes law. It will then permit those who organised the entertainment or performance to refund any Entertainment Tax which has been levied. I would draw the attention of hon. Members to the actual wording of the subsection. They will see that it refers to a payment:
which by virtue of this Section"—
that is the Clause we are discussing—
is not chargeable with duty …
I think it is plain that we are limiting the refund of Entertainment Duty to cases in which duty may have been paid and should not have been paid because of the bringing into operation of this Clause.

Mr. Keeling: If that explanation is correct, and if that is the only meaning of subsection (3), why does not the right hon. Gentleman leave out the first few words:
This Section shall be deemed always to have had effect.
Why does not the subsection merely say:
Where entertainments duty has been charged on any payment made before the said thirty-first day of July, being a payment which by virtue of this Section is not chargeable with duty, the person by whom the duty was paid shall be …
entitled to reclaim it? What is the virtue of the sentence:
This Section shall be deemed always to have had effect
and why does it not mean what it says?

Mr. Glenvil Hall: It does mean what it says. I am not the author of the words. They go back well beyond my time, and previous Governments have found them quite efficient and sound. I think it would be a pity if now, when by long usage both the courts and those who have to implement these Acts have found these words good and sufficient, we should attempt to alter them; because that kind of thing very often leads to more difficulty than we are trying to cure.

Mr. C. Williams: Would the right hon. Gentleman mind answering my point about a Cornish gorsedd, because it is an important one; and also whether wind instruments are technically covered?

Mr. Glenvil Hall: As I think the hon. Member for Bodmin (Mr. D. Marshall) said, this matter was considered when we were dealing with the Finance Bill of last year, and I think we did come to the conclusion that a gorsedd was definitely covered just as an eisteddfod is covered. In the same way, so far as wind instruments are concerned they are musical instruments within the terms of this section.

Mr. D. Marshall: The Financial Secretary has said that we came to that conclusion before, but I should like him to assure the House that he has come to that conclusion now. I should like him to use the present tense, and say it is included in this Clause as well.

Mr. Glenvil Hall: I can give the hon. Gentleman that assurance.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

New Clause.—(ASSESSMENT OF PROFITS FOR INCOME TAX, ETC., PURPOSES.)

Where any person carrying on any trade profession or business (not being a company or corporation) or the whole of the partners in any partnership firm carrying on any trade profession or business give to the Commissioners of Income Tax notice in writing of his or their desire to avail themselves of the provisions of this section then in respect of the first normal accounting year in relation to such person or firm commencing not less than twelve calendar months after the date of such notice the profits of such person or firm shall be assessed for Income Tax and Surtax purposes on the basis of the fair three years average of the profits of such person or firm in such next first normal accounting year of such person or firm hereinbefore referred to


and the two normal accounting years immediately preceding such next first normal accounting year and the profits of such person or firm shall continue to be so computed in every subsequent year of assessment on the basis of the fair three years average of the profits of such person or firm computed on the appropriate normal year and the two years next immediately preceding the same until the expiration of twelve months notice in writing given by such person or by all the partners in such firm such notice to expire at the end of a normal accounting year.—(Mr. Hale.)

Brought up, and read the First time.

Mr. Hale: I beg to move, "That the Clause be read a Second time."
This proposed new Clause is a sincere attempt to bring to the attention of the House a very genuine point, which I promised the Committee when they were considering this matter that I would try to cover by a draft, so that it could be brought up for discussion and consideration.
The problem to which the Clause is directed is that of the man with a fluctuating income; and that income can fluctuate for many reasons. There is, ofcourse, the familiar problem of the writer, or the distinguished theatrical star, who may spend many years of earnest endeavour on small salaries and then enjoy a temporary, possibly even an ephemeral publicity, afterwards reverting again to the lower income grades; but during that time he has to pay in full on the high income which he may enjoy for a limited period. I remember discussing the matter with a very well-known radio performer who is still living, and so I will not give any indication of his name or his particular financial situation. He said to me, "I give myself about five years, and in those five years I have to make provision for my wife and children. You, Leslie, if you are lucky, will have 25 years for the purpose." That has always seemed to me to be a point of real importance and hardship.
There is another quite different aspect of the matter. Distinguished members of my right hon. and learned Friend's own profession, if rumour—always a lying jade—may be temporarily credited, do at times attain quite substantial incomes, but they may frequently be called upon to perform important public service for which they receive no remuneration. A distinguished member of the Bar may be asked to go abroad to preside over some commission for six months; or he may

have a temporary appointment in the Services. A member of the Bar has no continuity of income even of the type which I enjoy. While he is abroad his income has gone completely, and when he comes back he may find difficulty in regaining it. The result is that in one year he may enjoy a very large income and in the following year he may see that income temporarily disappear, it may well be to recur a year later.
6.0 p.m.
The problem becomes much more acute in the days of modern taxation when, of course, the higher rates of income are very heavily taxed. I took, for experimental purposes, the case of the married man with no children whose income is wholly earned. On an income of £2,000 a year, he would today pay in Income Tax a sum of £594. In other words, on the whole of his income he would pay at a rate a fraction less than 6s. in the £. On an income of £10,000 he would pay £6,381, or at a rate, on the whole of his income averaging it out, of just under 13s. in the £. On the middle figure of £6,000 he would pay £3,181 10s. Of course, I am including Surtax in these figures. The House will readily understand that, because it is in respect of Surtax that this matter would primarily apply.
This is not a new proposal. It was in the Finance Act of 1842 that the three years' average was brought into force, and that average then applied to all incomes. In those days taxation was so small that the importance of this procedure was not very specially manifest. The system was amended in 1856. Under the then law it was possible for the Income Tax payer either to pay on a three years' average or on the actual figure, whichever was the lower. That clearly gave the Income Tax payer a most unfair advantage, and that practice was criticised for many years. It was criticised in the Departmental Committee on Income Tax of 1905 and by the Royal Commission of 1920. It was acting on the criticism of the Departmental Committee and the Royal Commission that in 1926 the three years' average was abolished by the right hon. Member for Woodford (Mr. Churchill) when he was Chancellor of the Exchequer. The alteration came into force in 1927.
There was much force in the removal of the three years' average as it then stood. The main criticism against it was directed at the option it gave that one paid on the lower of two figures. Therefore, I have tried to draft a Clause which would bring before the House the real need for this average and which, at the same time, would try to give to the Treasury protection from the exploitation which the previous proposal involved. The Clause as drafted provides, first, that it shall only apply if the taxpayer—or, if it is a partnership, the whole of the partners—give 12 months' notice in advance of their intention to avail themselves of the Clause.
The reason for that provision is that it would be unfair to say to the musical artist, the radio star or the distinguished counsel that they could wait until this happened and then say, "I am doing so well that it will now pay me." If a man feels that he belongs to one of these comparatively rare professions whose incomes fluctuate so violently that it will be hurt by this state of affairs, then he must give 12 months' notice. Equally, I have provided that once notice has been given, it can only be terminated on 12 months' notice.
The House will bear in mind that there is another aspect of importance. I speak with a certain amount of feeling on this matter. The right hon. and learned Gentleman will know that Surtax is paid in arrear and it is on one's income for 1947, for example, that one finds oneself levied for payment of Surtax on 1st January, 1950. It can be a very real hardship if the prosperity that one thought might continue is not continuing, to find that one is called upon two years later to pay an amount which might well be twice the total income which one derives for that year.
Speaking as a fairly obscure professional man whose income is not so high that he has much to gain by this, I will say that my income has fluctuated in the last five years to the extent that the highest figure is three times the lowest figure. I am speaking for many professional men when I say that that is inevitably the position. I am not seeking for anyone any reduction in the taxation that be should pay. All I seek is that

each year it be averaged out, so that he pays on the real level of his income and is not called upon to pay on the top rate, at a singularly high figure, when he may find the next year that his income has dropped to the extent that he really cannot pay. Circumstances such as this have brought about real hardship.
I do not underestimate the administrative problems which this proposal involves. But in these days, the accountant, the auditor, indeed the Income Tax adviser, has become almost an essential to every business or almost an essential to every business or professional man. In many professions, including my own, there is a statutory obligation to have accounts audited. There is a statutory obligation to comply with accountancy rules. Therefore, the accountant's certificate is available and the administrative difficulties are much less than they would have been 20 or 30 years ago when the auditor or accountant did not play such a prominent part in the lives of professional and business men.
In drafting this Clause, I have tried to take into account all the difficulties. I have tried to draft it in such a way that it would not make possible any exploitation. I bear in mind, too, that it is being introduced at a time when it will have the least harmful effect upon the Treasury and the least beneficial result to the taxpayer, because the normal expectation—an expectation reinforced by the speech we heard from the Chancellor today—is that on the whole the tendency will be for the general level of incomes to diminish. Therefore, there is not the benefit that might be derived if there were a prospect of expanding incomes.
I have put the Clause down in as fair a way as possible, to try to remedy some of the complaints voiced from time to time in the columns of the Press and in the meetings of professional, learned and other societies. I have tried to meet a problem, which I think is one of importance, in such a way that no one would get any unfair advantage at all, and I have tried to provide that people in future shall pay tax upon their real and effective income and not upon the fluctuations which would cause them harm. I do not think that it is necessary for me to elaborate the matter further.

Mr. Deputy-Speaker: Does any hon. Member wish to second the Motion?

Lieut.-Commander Braithwaite: I beg to second this Motion.
As we are on the Report stage and as this new Clause requires a seconder, none apparently being forthcoming from the Government benches, I should like to say that the hon. Member for Oldham (Mr. Hale) has made a proposition of considerable value. I read his Clause on the Order Paper and I imagined its purport to be as he has explained it to us. There is no doubt at all that if anything can be done to iron out the sharp fluctuation of tax assessments, it would, as the hon. Gentleman said, be of value to a great many professional people. I note that he has very properly I think, narrowed his exemptions to persons engaged in a trade, profession or business. He ignores companies and corporations. Therefore, the new Clause will deal with that section of the community which is most affected. Unless we hear from the learned Law Officer that there is some flaw in the wording or drafting, the intention seems to be clear enough. Whether the wording has the result which the hon. Gentleman has in mind is, ofcourse, for the legal adviser to tell us. If it is the case that this Clause is sound in its drafting, there is no doubt at all about the soundness of the proposal before us.

Mr. W. J. Brown: I want to support this new Clause by reference to Governmental practice in another connection. The other night we were discussing in this House the new regulations governing the pensions of police officers. One Clause of those regulations provided that, when a policeman was promoted during the last years of his service, his remuneration for the final three years of his period of service should be averaged for the purpose of determining the pension which he was to be paid.

Mr. Houghton: The pension then payable was payable for life.

Mr. Brown: I know, but the point behind the Government's support of those regulations was that it was unfair to burden the State for a long period of time after a man's retirement with a pension which was sharply inflated because of his

promotion during the last few years of his effective Governmental service. The Government took the view, and I am not arguing against it, that when we are paying out State money, we should try to avoid sharp extremes up and down, but average the remuneration and determine the liability of the State by reference to it. If that principle is operative in paying out State money, it ought also to be operative when the State is taking money from the citizen.
As things are, I do not think there is one of us who could not confirm what the hon. Member for Oldham (Mr. Hale) has said in regard to professional men being embarrassed to a very great degree by the circumstance that their earnings are very often sharply uneven, and by the circumstance that heavy taxation, indeed ordinary taxation, is collected heavily in arrear. Indeed, it is difficult to get the Government to give one an up-to-date assessment of one's tax indebtedness for a long time after the liability has been incurred. I am quite sure it is the experience of every one of us that we are continually dealing with tax matters two or three years late, not because people want to dodge their tax liability, but because the Revenue machine is overworked and certainly understaffed. Certainly the collection of taxes is heavily in arrears. When ordinary Income Tax has to be cleared up first before a start can be made on Surtax, the Surtax is still more heavily in arrears, and a man is often confronted with a demand for a large sum of money relating to a high earning capacity in one year and not subsequently repeated. That may happen at a time when his earning capacity is at a minimum and he is being taxed on the maximum, which may cause him very grave embarrassment indeed. If it is administratively possible to work this new Clause, I heartily commend it to the Government.

The Solicitor-General (Sir Frank Soskice): The hon. Member for Rugby (Mr. W. J. Brown) drew an analogy between the police regulations and the new Clause which is now being discussed, which I do not admit. If, however, there is an analogy between the two cases, the force of his argument is taken away by this consideration, that, broadly speaking, the system now proposed has already been tried. It was tried and abandoned in


1926, and it was abandoned largely because it was found that on balance the system then in force of the three years' average imposed more hardship upon the taxpayer than the system which was adopted in its place, which is the present system now being operated, in which the taxpayer under Schedule D pays tax on the accounting year ending in the previous year to that on which he was assessed. That will be my principal reason, but I think I can give other reasons for saying that it imposes great hardships.
6.15 p.m.
The taxpayer finds himself in considerable difficulty when there may be a sudden fall in his profit in the third year, when he pays on an assessment which is based upon the much higher rate of profits which emerges from the average rate of the three previous years, and is more than he would have to pay if he were to pay simply on the earnings of the previous year; that is to say that, in the three-year period, the rate of profits over the three years may be much higher if profits were falling than it would be if he was paying on the previous year's profits.
When that system was in operation there was considerable complaint, and taxpayers said that they were faced with great difficulties because, when profits were falling, instead of being able to pay on a comparatively low rate of profits, they had to pay on a much higher rate which emerged from the average of the previous three years, and that was one of the main reasons the previous system of the three years' average was abandoned. My hon. Friend shakes his head, but I am informed that that really is the case, and, if he will forgive me contradicting him on another point, I think he will find that he is mistaken if he will look at the Income Tax Act, 1918, in which he said there was an option. There was no option then; it was payable on the previous three years by Statute.
My hon. Friend gives an option in his new Clause, but I do not think that it will make the slightest difference to the consideration which I have just urged—the fact that the previous system produced hardship in a time of falling profits. He now provides that 12 months' notice should be given for the taxpayer to avail himself of the provisions of the new Clause. Even under his system, the

advantage would be lost, because, where the taxpayer found that his profits were falling and he gave notice, a period of 12 months would have to elapse before the new system could operate, and he would find, until that 12 months had elapsed, that he still had to pay a much higher rate—the average for the previous three years—than he would have to pay if he were taxed on the previous year, as he is at the moment. Exactly, the same difficulty would arise as that which led to the abandonment of the old system.

Mr. Hale: Will my right hon. and learned Friend allow me? Is he not making a false point in this matter? If I take the case of a member of the Bar, a man of 60 would not give notice, because he would have a reasonable probability that his income had reached a stage at which it would begin to go down, and he then has that option. There is really nothing in the point which he is making. It is quite clear that, if we average a continually diminishing income, he would pay a little more, whereas if we average a continually growing income, the State would take a little less.

The Solicitor-General: The answer to that is that this deals with non-company taxation and not only members of the Bar, and therefore large numbers of taxpayers whose profits go up and down are to be given a 12 months' interval in which to switch from the three-year period to the provision now proposed, but they will very soon find themselves in difficulties—the same difficulties in which taxpayers were placed before 1926, when the previous system was abolished. The system was in fact tried, and on balance was found to be wanting. It imposed more hardships upon the taxpayer than the present system does.
What is the intended virtue of the present system? It is that the taxpayer is taxed on the previous years' earnings and on the accounting year which ends in the year previous to that in which he is paying tax, and the virtue of that is to try to relate the actual earnings to the amount of tax he has to pay. This only applies in cases of assessment under Schedule D, and does not apply to Schedule E taxpayers. Generally speaking, we have to look for some completed trading period to tax. The present legislatsion says that we will try to get the


trading year which is nearest to the year on which a man is actually being taxed; in other words, we will try to ascertain his position for tax purposes at a period nearest to the actual year in respect of which he is being asked to pay tax. That is the aspect of the matter so far as the taxpayer is concerned.
So far as the Revenue is concerned, the system which my hon. Friend seeks to introduce has undesirable features. It does, after all, introduce something of an element of a gamble. When profits are rising and we are in a buoyant period of trade, then, I suppose, there will be a tendency to rush to the three-year average method of computation. Conversely, when there is a period of falling profits, I suppose there will be a rush back, so that there will be a perpetual bet between the taxpayer and the Exchequer. The taxpayer will be assessed on his earnings according to whether his bet turns out to be justified or not. That is not a desirable principle on which to assess tax liability. There is that obstacle, and there is also, if one looks at the actual form of the Clause, the objection that it would enable a taxpayer to take a year of poor trading, when he made very low profits, into account twice over for the purpose of assessing his tax liability.
Supposing he gives his notice of year one, then year three, under the Clause as drawn, will be the first normal year, and in year three he will be taxed on years one, two and three. If year one is a bad trading year, it will be taken into account for that purpose. In year two, as his notice given in year one will not become operative, he will be taxed on the existing principle, namely, on the preceding year's earnings, so he will have the advantage of getting his low profits in year one taken twice into consideration. I have no doubt that my hon. Friend and hon. Members opposite will admit at once that would not be fair to the Revenue.
This is a matter of considerable difficulty and I am perfectly conscious of what my hon. Friend says with regard to the person who, having worked himself up into a position of considerable eminence in a profession, the arts, or whatever it may be, suddenly finds that he has a substantial tax liability because he is reaping the advantage of the eminence to which he has attained. It is a very

difficult problem and if I might say so, as I have with regard to a number of previous Clauses, it is a matter with which the Tucker Committee will concern itself.
I ask the House not to adopt the Clause. It is based very much on the principles applied before 1926, the principles which were then abandoned. It really faces the taxpayer with precisely the same hardship as marked the pre-1926 system, and it is obviously one of the matters which must first be reviewed by the Tucker Committee. The Clause is defective in point of machinery, for the reasons I have given, and therefore I hope that the House, taking all those considerations into account, will agree that it cannot be adopted in its present form.

Mr. Assheton: The right hon. and learned Solicitor-General has given the House a very careful appreciation of the Clause moved by the hon. Member for Oldham (Mr. Hale). I think that everyone who listened to the speech of the hon. Member for Oldham had a great deal of sympathy with what he was driving at. He pointed out how hard it was in many cases when a man who had a fluctuating income found himself paying a heavy rate of tax in a year in which it so happened that his income was very much lower than in the year in which he was assessed.
The Solicitor-General told us that under the law as it stood before 1926, there was a provision for basing assessments on a three-year average, and that that system had been abandoned because, on the whole, it did not suit the taxpayer. I am not quite sure whether that was the reason or not, but at any rate, abandoned it was. Since then many hardships have fallen on the taxpayer in consequence of its abandonment. It is true that there may have been advantages to the taxpayer as well, but there have been hardships. I wonder whether the Solicitor-General will agree with me that the very greatly increased rates of tax have made a great deal of difference to this problem. In the days prior to 1926, the rates of tax were much lower than they are today, and consequently the whole pressure on the taxpayer was not nearly so severe.
I will give the House one short illustration of how very unfairly the present form of taxation can work. It is an


illustration which was given to me the other day by a valuer who, at the moment, is extremely overworked, engaged as he is in valuations under the Town and Country Planning Act. There may be hon. Members in this House who are themselves in that position at the moment. He told me that at the end of five years he is likely to receive a very substantial fee, which he estimated to be in the nature of £10,000, as a result of five years' hard work. Although for five years he will be working on these valuations, his reward will not come to fruition until the end of that period, when he will receive £10,000 for the work done. As he already has a substantial business, it means that that £10,000 will come on top of his normal income, and he anticipates that, in fact, he will receive less than £1,000 as his reward for that £10,000 worth of work.
I know that the Solicitor-General is fully aware of that sort of thing, and I am very glad to hear that the Tucker Committee is to consider this problem. In the light of the hon. and learned Gentleman's speech, and in view of the fact that he told the House that the Tucker Committee is going to consider the problem, I dare say that the hon. Member for Oldham will not seek to press his Clause to a Division. Whether he does or not, I should like to assure him that we on this side of the House have a good deal of sympathy with the object underlying it.

Question put, and negatived.

New Clause.—(AMENDMENT OF FINANCE ACT, 1946.)

Subsection two of section twenty-seven of the Finance Act, 1946, shall have effect as if there were added the words "or is payable to a wife by way of old age pension by virtue of her own contributions under the National Insurance Act or earlier Acts.—[Mr. Houghton.]

Brought up, and read the First time.

6.30 p.m.

Mr. Houghton: I beg to move, "That the Clause be read a Second time."
This is a very simple Clause and has a very simple purpose. Before the operation of the Finance Act, 1946, the contributory pensions of wives, who earned their pensions under the Widows' and Orphans' Contributory Pensions Act by reason of their own contributions, were

allowed to be reckoned as their own earned income, and that gave them the benefit of the reliefs given under the Income Tax Act for wives' earned income. But under Section 27 (2) of the Finance Act, 1946, the privilege of counting a contributory pension as a wife's earned income was taken away. Since then, a wife's contributory pension has been reckoned as the husband's earned income, and not that of the wife.
This Clause is intended to restore the position under which a wife, who has contributed under the insurance schemes to her own pension and gets her pension by virtue of her own contributions, should be allowed to reckon that pension as her own income for Income Tax purposes without having the disadvantage of reckoning it as part of the husband's earned income. In that respect I seek to put the contributory pension of a wife on the same footing as a teacher's pension or a Civil Service pension to a married woman, and to any other married woman who may earn a pension by reason of her vocation or occupation. It would also restore the status quo ante of the position before 1946.

Mr. Eccles: I beg to second the Motion.
I think this case is one to which the House will listen with sympathy. It is high time we did away with anomalies between men and women as fast as we can, and in the matter of taxation there are many anomalies. The proposal in this Clause is very sensible. The Government have been very mean on all questions of equal pay. Here is an opportunity for the Government to do a little to show that they will carry out their usual protestations in favour of the female sex.

The Economic Secretary to the Treasury (Mr. Douglas Jay): This Clause refers to a rather narrow and limited point. The Clause seeks, as I understand, to make eligible for the special wife's earned income allowance an old age pension payable to a married woman as a result of a contributory payment. The recipient of an old age pension under the National Insurance Act—that is to say, a retirement pension—already gets as my hon. Friend knows, the ordinary earned income allowance of one-fifth. She gets


that by virtue of the Finance Act, 1946. Therefore, we are not discussing whether the normal earned income allowance should be enjoyed by a married woman receiving a contributory old age pension. That main point is already conceded, and is in force.
The issue raised by the Clause is a rather special one: whether a married woman of that kind should, in virtue of her pension, qualify also for an additional special wife's earned income allowance which, as the House will remember, was raised from £80 to £110 in the Finance Act, 1946. The Chancellor of that time decided that this further allowance should not apply, for the very straightforward reason that the allowance was raised specifically to induce married women to take up work in industry or other productive work, or to remain in work if they were already there. If that is the purpose of this special married woman's earned income allowance, it would not accord with that purpose to apply it in the case of a married woman who has, ex hypothesi, retired and is receiving a retirement pension.
For that reason, my right hon. and learned Friend accepts the argument put forward by the Chancellor in 1946 that the additional allowance should not apply, although, of course, the ordinary one-fifth earned income allowance is enjoyed by a married woman receiving a retirement pension. That is the main reason why we do not feel able to accept this Clause. But there is one subsidiary reason which I think is relevant. This additional married women's earned income allowance was originally introduced many years ago; I believe it was in 1897. The reason then given for it, which has always been used as its justification, was that if a woman as well as her husband goes out to work it is probable that she will have to incur special expenses in order to maintain her home while both she and her husband are at work. That is the classical justification which has always been given for this allowance. That, again, does not apply to a married woman who has retired from work and is living at home in receipt of a retirement pension. For both those reasons we do not think the case is made out for this further concession.

Lieut.-Commander Braithwaite: I am sorry that the Economic Secretary has

not been more forthcoming in this matter. I think the most significant portion of his remarks was that which he omitted. It is customary on these occasions for the Chancellor or one of his lieutenants to wind up his resistance to these proposals by saying that the cost would be prohibitive. There has been no mention in this instance of any cost at all. I have a suspicion that the cost of such a concession would be extremely trifling, and it would aid the House in coming to a decision on this Clause if we could be told from the Treasury Bench what would be the cost of this concession if the Government were to make it.

Mr. Jay: I have not the exact figure, but it would be under £1 million.

Viscount Hinchingbrooke: I think the Economic Secretary's reply was conclusive so far as I am concerned, on both the grounds that he adduced, but I have a sort of oblique reason for wishing that this new Clause would go through. The reason is that the Clause would ensure that the married allowance was justified by the payment of the pension and would remove the requirement that women should earn their right to the allowance by entering industry. In these days productivity is not everything; sociology is equally important. It is a great pity that we are continuing to pay this allowance to married women, inducing them to go into industry and leave their homes without sufficient care or sustenance. The more we see today of what is going on in these homes and what is happening to the children, the more strongly one feels that that allowance is a mistake. Therefore I regret that this Clause has not been accepted, because so far as old age pensioners are concerned, old people who might look after homes and children, the allowance now operates in the direction of their earning money outside.

Mr. Haworth: I cannot help expressing my disappointment at the Economic Secretary's reply. It seems to me that the Government are treating this matter in two different ways with respect to the same person. The Treasury say to a woman, "If you go out to work we will make an assessment of your income as a woman, quite independently of your husband's income." In fairness to the woman that policy ought to be pursued in relation to the rest of


the income which she gets, either from her earnings, or from her pension resulting from her earnings and the stoppages for insurance which were made from her earnings while she was working. If we do not accept the principle of this, I think it is unfair to a woman to say to her, "We will not link your income with your husband's if you go to work in industry during this period of labour shortage; we will treat you as a separate entity altogether." If we say that to her it seems to me that we should be logical and fair and allow the woman to be treated as a separate entity right the way through.
She receives this pension only because of the fact that she has been working and contributing through insurance as a worker. She does not receive this money as the wife of her husband, but as a worker in her own right. I think the Treasury should be logical and fair about this, although I do not accept the wholesale strictures of the hon. Member for Chippenham (Mr. Eccles) about our unfairness to women generally. I think we have been comparatively generous to women in many walks of life, but I believe there is a case here for thinking this over again and I hope further consideration will be given to it.

Question put, and negatived.

New Clause.—(AMENDMENT OF FINANCE ACT, 1925, S. 15.)

Subsection (2) of section fifteen of the Finance Act, 1925 (which, as amended by subsequent enactment, provides in a case where an individual or his wife has attained the age of sixty-five years and his total income does not exceed five hundred pounds for a deduction of tax on an amount equal to one-fifth of his income), shall have effect as if the words "six hundred pounds" were substituted for the words "five hundred pounds."—[Mr. Selwyn Lloyd.]

Brought up, and read the First time.

Mr. Selwyn Lloyd: I beg to move, "That the Clause be read a Second time."
This raises a matter to which many of my hon. Friends and myself attach very great importance. It deals with the allowances to be given to elderly people of limited means. As is set out in the Clause, at the present time such a person—either a man or his wife—on attain

ing the age of 65 is entitled to a sort of earned income allowance up to one-fifth of his unearned income, provided his total income does not exceed £500. That is putting it fairly crudely, but I think it is the effect of the present allowance and, of course, it is very important that such an allowance should be made because it is a recognition of the fact that unearned income very often is a complete misnomer and that what is called unearned income, very often represents income upon the hard-earned savings of a lifetime.
I therefore suggest that it is reasonable that, subject to certain limits, an extra allowance should be given in respect of the incomes from those savings. At the present time the limit is £500. This very modest proposal which I place before the House would raise it to £600. The total income beneath which such an allowance would be given would be raised from £500 to £600 and as, of course, the allowance would be only one-fifth of the amount, the cost would be correspondingly reduced.
I suggest that there are special reasons at the present time for giving favourable treatment to people within the limits of age and income to which I am referring. First, their costs have gone up very much indeed. They do not benefit from increased wages although, if they must have someone to look after them, they themselves often have to pay increased wages. Their costs of travelling, of fuel and light and all the rest are going up all the time. Very often the cost of their accommodation has gone up. In all the circumstances at the present time, I suggest that it would be a very reasonable step for the House to take if it increased this sort of earned income allowance for such people. Not only would it give relief to people who are being very hard hit and are having great difficulties, but it would also be what I think is equally important—an incentive to people to continue to save.
I believe that every additional allowance which is given in respect of income from savings is a very sound thing for the country. I do not think we shall get out of our present economic difficulties until we have re-created the belief that savings are really worth while. Every additional measure, however small, whereby we can give people some


encouragement at the present time to believe that they will get additional benefits and consideration in respect of income from savings is helping the country as well as giving relief to people who, I believe, are hard hit.

Lieut.-Commander Braithwaite: I beg to second the Motion.

6.45 p.m.

Mr. Jay: I think that the arguments advanced by the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) are good arguments for having an age relief of this kind, but they are not conclusive arguments for increasing the figure from £500 to £600. As he said, the purpose of this age relief was to ensure that someone over 65 who was living in old age on an investment income, which he might very likely have saved out of his earnings during the earlier part of his life, would not be worse off than somebody living on a pension which, of course, counts as earned income for this purpose. It was because there would be a limit to the income under which one would get earned income relief that, when this age relief was introduced, it was thought fit also to set a limit to this additional form of relief.
I do not think the hon. and learned Member would contest the fact that there must be some limit, and the only question before us is whether £500 is the right limit or whether we should raise it. The hon. and learned Member argued—and I think this was his main argument—that the cost of living had risen since this age relief was first introduced; but I do not think that is a very good or sufficient reason for selecting this particular Income Tax allowance as one to be raised at the present time.
As a matter of fact, this age relief now stands at £500, which was the exact figure at which it was set when the present Leader of the Opposition introduced it in 1925. If we compare that, for instance, with the single allowance, which stood in 1925 at £135 and stands today at £110, or with the married allowance, which stood in 1925 at £225 and stands today at £180, this allowance is in a favourable position. It appears, therefore, that as a result of reductions in allowances during the war, with some subsequent reliefs, this old age relief stands more favourably by

comparison with what it was in the 1920's than do some of the other allowances, For that reason there is, in our view, no case for singling out this allowance for relief this year.
There is one other argument against this proposal which, I think, is cogent and it is, as I expect the hon. and learned Gentleman realises, although he did not mention it, that there is what is known as a marginal provision under the old age relief which assists people whose income is actually over £500. That works roughly in the following way. An individual over 65 with an income exceeding £500 gets the additional allowance of one-fifth for the first £500 and has to pay tax also on an amount equal to five-eighths of the excess over £500. The result of that is that, if his income is over £500, he gets some relief, although it is a relief on a diminishing scale.
Until last year this additional relief disappeared altogether at £650 for a single person and £635 for a married couple. Last year we gave further relief to people in that, as the hon. and learned Member may recall, we lowered the proportion on which the relief above £500 was based from three-quarters to five-eighths. The effect was not merely to increase the relief given for all those previously receiving it, but also to raise the level of investment incomes to which the relief applied. It raised the maximum to £757 in the case of a single person and £731 in the case of a married couple. Therefore, a concession was given last year to people in this category for very much the reasons which the hon. and learned Gentleman has given, and we do not think that it is necessary to give further relief this year.

Mr. Joynson-Hicks: I like this new Clause. I think it is a good Clause, and I am very disappointed indeed with the reply we have had from the Economic Secretary. I do not think that the Economic Secretary's argument is very good, because I am quite sure that there is no analogy between the fall in the personal allowances for Income Tax which has taken place since 1925 and the old age allowances that we are discussing here. They are two completely different things, and I do not think that is a fair comparison at all.
The real, basic point is that in 1925 Parliament considered that this relief was applicable to people of that age who had an income of up to £500. If we still maintain that view, it is obvious that the figure of £500 should be increased, because what was worth £500 in 1925 was certainly something completely different for what is valued at £500 today. I am no mathematician, but I should say that, on the most favourable calculation possible to the Government, £500, the value of which Parliament had in mind in 1925, is probably represented today by £1,000.
Therefore, if we are really trying to help that class and category of people whom Parliament had in mind in 1925, we certainly ought to raise the limit of this allowance at the present time. To raise the figure to £600 seems to me to be a very fair and proper step in the right direction, and I frankly do not think the alternative reliefs to which the Economic Secretary has referred, given by Parliament to elderly people last year, have any bearing on this particular aspect of the matter. I hope he will have an opportunity of reconsidering it at some future date.

Mr. Eccles: I should like to support what my hon. Friend has said. Not only has the value of money gone down, but—and this is what I believe is more important in this case—interest rates have gone down very much. Therefore, the income that a person over 65 gets from having saved £5,000, let us say, is much less today than it would have been in 1925 when this allowance was first brought in. The people who are in employment, married couples and single persons, have their salaries and wages and means of adjusting themselves to the price level, and those means are very much greater than those open to the old people. Old people really are caught with whatever their savings will yield them.
I do not wish to detain the House long, but I would point out that in places like Bath, for instance, which is very close to my constituency, and where I go very often, the problem of the old people is very great indeed. I think that any hon. Member who is associated with any of those towns where there are large numbers of retired people will know that the cost of their rooms has gone up, and that

when they have paid for their accommodation, they really have very much less money left to them than they had before. I hope the Chancellor will think again. I do want to protest that continually we are not told what these things for which we ask will cost.

Mr. Jay: This would cost £1,500,000.

Mr. Eccles: I thank the Economic Secretary. We know that this would cost £1,500,000. The House may consider whether a small loss of revenue from dog licences, or from any of the other sources where a little concession has been given, is much better incurred than that which would be incurred in giving some concession to the old people.

Mr. John McKay: I have been very much interested in the arguments put forward in favour of this Clause. I come from a constituency where, I think, there are very few people who have as much as £10 a week, and particularly few retired people with that amount. Although we have not in my constituency the class of people who have that amount of money, we have a very big section of the community comprised of retired people who have possibly £2 a week. I think that what obtains in Wall-send is obtaining largely throughout the country; and those poor people, who are aged also, are crying out for some improvement in their position. I note that hon. Members opposite, while they are attempting to obtain the support of the working people of the country, seem to have in their minds people whom we consider to be fairly well off already.
In considering whether this allowance should be made, we have to ask whether the Exchequer is in a position at the present moment to give away anything more. If we pass the judgment that we could possibly stretch a point and give a few millions away, then the next thing we must decide is, to whom shall we give help? To whom shall we give these few millions? Ought we to give these few millions to the people who are retired, who have no families to support, who have £10 a week income, and who, having been able to provide themselves with that amount, probably also have houses of their own? Or shall we, in giving these few millions away, give them to the poorer community, which is so great and numerous in the country?
To my mind there is no question at all as to what we ought to do, and it is surprising to me that we continually have Amendments and new Clauses to help, not those poor people, but the people whom we should consider to be already fairly well off. We had a proposal last week suggesting that we should give several millions to help people who are about as well off as those we are considering in this Clause. I think there is no question that the judgment of the people would be, without considering sectional ideas but simply as a matter of justice, that if we have any millions to give away, they should go to help those with only £2 a week income, before help is given to those with £10 a week income.

Sir William Darling: I think the House must be very grateful to the hon. Member for Walls-end (Mr. McKay) because he has given me an opportunity to answer what he has said. Did the hon. Member take the opportunity he had one or two nights ago to support the Opposition in proposing that we should give £5 million, which was the cost of the match tax, to the working class? I did not notice his name in the Division list supporting the Opposition. Nor did I notice that the hon. Member for Wallsend supported this side of the House when we protested against the taking away from the working class of £10 million in National Insurance. The hon. Member has had ample opportunity to deal with these matters, and he enters this Debate today, I think, in rather a difficulty, because we are not discussing the match tax, nor increased contributions to National Insurance, but a middle-class problem of a very narrow and limited character.
This concession, were it granted, would cost the country £1,500,000. Frankly, it is a concession to what I think was the defrauded class. Those are the people who have lived through three wars and have seen their income and savings reduced to a third of what they were when they earned them. They are the backbone of the country. This side of the House is asking for a small measure of justice for people who worked long and saved hard. Most of them have given their sons in the country's service in two wars. At the end of all that experience they find that their income, in the earning

of which they served not only their own interests but the interests of the State also, is reduced to one-third of its former value.
7.0 p.m.
This concession, would, I submit, not cost the Treasury anything. If I were in the position—as I may well be at the age of 65—of not having the rebate asked for under this Clause, what would I do? I have no hesitation in telling the House what I would do. I would spend my capital. Would that be more profitable for the Treasury than giving me an allowance? I submit that it is in the interests of His Majesty's Treasury to encourage those few people who have the foresight, the prudence and the thrift to save, and that this Clause is an encouragement to them to save. If I have this Clause in my favour, I shall be content. If it is not in my favour, I shall decide how long I am going to live—and it may not be so long under a Socialist Government as it would be under a more advantageous one—and, after working out the number of years I expect to live, I shall spend my capital. Is the Economic Secretary going to tell us that he is in favour of the reckless spending of capital rather than the use of one's income? This is a question of the prudent management of the State's resources, and I beg him to reconsider it, because the encouragement of thrift is not a thing which the Treasury can lightly set aside.

Mr. R. A. Butler: My hon. Friends and I feel that this Clause deals with the position of a particularly important section of the community. We do not underrate the claims of the hon. Member for Wallsend (Mr. McKay), but perhaps he would be willing to reply, if he had the chance to speak again—which I regret, he has not—to the objections made by my hon. Friend the Member for South Edinburgh (Sir W. Darling). We on this side of the House have tried throughout the discussions on this Bill to represent all sections of the community, and it has been a matter of great regret to us that when we have stood for the interests of the poorer sections of the community we have not had the support of hon. Gentlemen opposite, notably in the case of the £10 million extra, added in an indirect and, we think, particularly evil way, to insurance contributions. Particularly


on such questions as maternity benefit, and so forth, we were not only not supported by them, but voted down by them.
I do not want to renew old sores or spoil the amicable atmosphere in which we are considering this Bill today. I wish, however, to refer the House to the case of this particular section of the old people. I should like most strongly to support the arguments put from this side and to draw them to the attention of the Financial Secretary. He seems to be in a benign mood, and perhaps he will follow up the intellectual argument of the Economic Secretary with a more warm-hearted approach. The Economic Secretary put before us a consistent, understandable and intellectual argument. His main point seemed to be that because single people and married couples had not had their position improved since the pre-war period, in 1925, when this sort of proposal was introduced, we should not pay attention to old people. That does not appear to be an intellectual argument which can be sustained. We should consider these old people on their own merits, and it is upon their own merits that we propose to pursue this matter to its logical conclusion.
I am sorry that the hon. Member who originally put down a similar Clause has unfortunately had to be absent today, but we support the object of this Clause which seeks to raise the limit of old age relief on unearned income by £100. We claim that this section of the community who have saved deserve our consideration. They are not a section of the community who have been able to enjoy the considerable increase in wage level which has taken place during the last few years.
When we were discussing earlier the question of the profits of companies, I drew attention to the considerable rise in the wage level that has taken place. These

old people cannot profit from that. They are existing on savings, and it is an important and remarkable fact how little attention the Government have paid in these Debates to the need of encouraging savings at the present time. Here is an opportunity for the Government to give an indication of their interest in savings and of their interest in the old people who have had the foresight to put by for their older years, and who are finding now, with the decline in the value of money—due to the financial policy of the Government—that they are unable to sustain the sort of life to which they have been accustomed.

The hon. Member for Chippenham (Mr. Eccles) raised the question of the decline in interest rates. This is a very relevant matter in considering the way of life of these people and the burden that falls upon them. It is a remarkable fact that in all periods of economic stringency, particularly when there has been loss of financial control by any administration in any country, that the class which suffers most are the people of this type. In fact, it may well be said that unless we can right our financial affairs, the rentiers and middle-class and those who have saved a little, may find that their lifelong efforts have been thrown away, due partly to the world situation and partly to the maladministration of the finances of the country. It is in the interests of such people who may be crushed between the upper and nether millstones that we ask for the sympathetic consideration of the Financial Secretary. We implore him to consider this case as an instance of a class who may well be crushed by present circumstances, and to show them his sympathy today by making this small concession and giving an answer worthy of him and of this House.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 118; Noes, 260.

Division No. 199.]
AYES
[7.7 p.m.


Agnew, Cmdr. P. G.
Bullock, Capt. M.
Darling, Sir W. Y.


Amory, D. Heathcoat
Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
De la Bère, R.


Assheton, Rt. Hon. R.
Carson, E.
Digby, Simon Wingfield


Bennett, Sir P.
Channon, H.
Dower, E. L. G. (Caithness)


Birch, Nigel
Clarke, Col. R. S.
Drewe, C.


Boles, Lt.-Col. D. C. (Wells)
Conant, Maj. R. J. E.
Duthie, W. S.


Bower, N.
Cooper-Key, E. M.
Eccles, D. M.


Bracken, Rt. Hon. Brendan
Crookshank, Capt. Rt. Hon. H. F. C.
Eden, Rt. Hon. A.


Braithwaite, Lt.-Comdr. J. G.
Crosthwaite-Eyre, Col. O. E.
Elliot, Lieut,-Col. Rt. Hon. Watter


Buchen-Hepburn, P. G. T.
Cuthbert, W. N.
Erroll, F. J.




Fletcher, W. (Bury)
Low, A. R. W.
Sanderson, Sir F.


Fox, Sir G.
Lyttelton, Rt. Hon. O.
Scott, Lord W.


Fraser, H. C. P. (Stone)
MacAndrew, Col. Sir C.
Shephard, S. (Newark)


Fraser, Sir I. (Lonsdale)
McFarlane, C. S.
Smiles, Lt.-Col. Sir W.


Fyfe, Rt. Hon. Sir D. P. M.
Maclay, Hon. J. S.
Smith, E. P. (Ashford)


Galbraith, T. G. D. (Hillhead)
Macmillan, Rt. Hon. Harold (Bromley)
Spearman, A. C. M.


Glyn, Sir R.
Macpherson, N. (Dumfries)
Spence, H. R.


Gomme-Duncan, Col. A.
Maitland, Comdr. J. W.
Stoddart-Scott, Col. M.


Gridley, Sir A.
Manningham-Bullet, R. E.
Strauss, Henry (English Universities)


Grimston, R. V.
Marlowe, A. A. H.
Stuart, Rt. Hon. J. (Moray)


Hannon, Sir P. (Moseley)
Marples, A. E.
Studholme, H. G.


Hare, Hon. J. H. (Woodbridge)
Marshall, D. (Bodmin)
Sutcliffe, H.


Harris, F. W. (Croydon, N.)
Mellor, Sir J.
Teeling, William


Harvey, Air-Comdre. A. V.
Morrison, Maj. J. G. (Salisbury)
Thomas, Ivor (Keighley)


Headlam, Lieut.-Col. Rt. Hon. Sir C.
Morrison, Rt. Hon. W. S. (Cirencester)
Thorneycroft, G. E. P. (Monmouth)


Henderson, John (Cathcart)
Mott-Radclyffe, C. E.
Thornton-Kemsley, C. N.


Hinchingbrooke, Viscount
Nield, B. (Chester)
Thorp, Brigadier R. A. F.


Hogg, Hon. Q.
Noble, Comdr. A. H. P.
Touche, G. C.


Holmes, Sir J. Stanley (Harwich)
Odey, G. W.
Wakefield, Sir W. W.


Hope, Lord J.
O'Neill, Rt. Hon. Sir H.
Ward, Hon. G. R.


Hudson, Rt. Hon. R. S. (Southport)
Orr-Ewing, I. L.
Watt, Sir G. S. Harvie


Hutchison, Lt.-Cdr. Clark (Edin'gh, W.)
Peto, Brig. C. H. M.
White, Sir D. (Fareham)


Hutchison, Col. J. R. (Glasgow. C.)
Pickthorn, K.
Williams, C. (Torquay)


Jeffreys, General Sir G.
Prescott, Stanley
Williams, Gerald (Tonbridge)


Jennings, R.
Price-White, Lt.-Col. D.
Winterton, Rt. Hon. Earl.


Joynson-Hicks, Hon. L. W.
Ramsay, Maj. S.
Young, Sir A. S. L. (Partick)


Keeling, E. H.
Rayner, Brig. R.



Lancaster, Col. C. G.
Renton, D.
TELLERS FOR THE AYES:


Law, Rt. Hon. R. K.
Roberts, Emrys (Merioneth)
Brigadier Mackeson and


Legge-Bourke, Maj. E. A. H.
Roberts, H. (Handsworth)
Colonel Wheatley.


Lloyd, Selwyn (Wirral)
Ross, Sir R. D. (Londonderry)





NOES


Adams, Richard (Balham)
Cove, W. G.
Haworth, J.


Allen, A. C. (Bosworth)
Cripps, Rt. Hon. Sir S.
Herbison, Miss M.


Allen, Scholefield (Crewe)
Crossman, R. H. S.
Hobson, C. R.


Anderson, A. (Motherwell)
Cullen, Mrs.
Holman, P.


Attewell, H. C.
Daggar, G.
Holmes, H. E. (Hemsworth)


Austin, H. Lewis
Daines, P.
Houghton, A. L. N. D. (Sowerby)


Awbery, S. S.
Dalton, Rt. Hon. H.
Hoy, J.


Ayles, W. H.
Davies, Edward (Burslem)
Hubbard, T.


Bacon, Miss A.
Davies, Ernest (Enfield)
Hudson, J. H. (Ealing, W.)


Balfour, A.
Davies, Haydn (St. Pancras, S. W.)
Hughes, Emrys (S. Ayr)


Barstow, P. G.
Davies, R. J. (Westhoughton)
Hughes, Hector (Aberdeen, N.)


Barton, C.
Deer, G.
Hughes, H. D. (W'lverh'pton, W.)


Battley, J. R.
Dobbie, W.
Hynd, H. (Hackney, C.)


Bechervaise, A. E.
Dodds, N. N.
Isaacs, Rt. Hon. G. A.


Benson, G.
Donovan, T.
Janner, B.


Berry, H.
Driberg, T. E. N.
Jay, D. P. T.


Beswick, F.
Dye, S.
Jeger, G. (Winchester)


Bevin, Rt. Hon. E. (Wandsworth, C.)
Ede, Rt. Hon. J. C.
Jeger, Dr. S. W. (St. Pancras, S. E.)


Bing, G. H. C.
Edwards, Rt. Hon. N. (Caerphilly)
Jenkins, R. H.


Binns, J.
Edwards, W. J. (Whitechapel)
Jones, D. T. (Hartlepool)


Blackburn, A. R.
Evans, John (Ogmore)
Jones, Elwyn (Plaistow)


Blyton, W. R.
Evans, S. N. (Wednesbury)
Jones, J. H. (Bolton)


Boardman, H.
Ewart, R.
Keenan, W.


Bottomley, A. G.
Fairhurst, F.
Key, Rt. Hon. C. W.


Bowden, Fig. Offr. H. W.
Farthing, W. J.
King, E. M.


Braddock, T. (Mitcham)
Fernyhough, E.
Kinghorn, Sqn.-Ldr E.


Brook, D. (Halifax)
Field, Capt. W. J.
Kinley, J.


Brooks, T. J. (Rothwell)
Fletcher, E. G. M. (Islington, E.)
Kirby, B. V.


Broughton, Dr. A. D. D.
Follick, M.
Lang, G.


Brown, T. J. (Ince)
Fraser, T. (Hamilton)
Lavers, S.


Brown, W. J. (Rugby)
Freeman, J. (Watford)
Lee, F. (Hulme)


Bruce, Maj. D. W. T.
Gallacher, W.
Leslie, J. R.


Burden, T. W.
Ganley, Mrs. C. S.
Lewis, T. (Southampton)


Burke, W. A.
Gibbins, J.
Lindgren, G. S.


Butler, H. W. (Hackney, S.)
Gibson, C. W.
Lipton, Lt.-Col. M.


Callaghan, James
Gilzean, A.
Lyne, A. W.


Carmichael, James
Glanville, J. E. (Consett)
McAdam, W.


Castle, Mrs. B. A.
Greenwood, A. W. J. (Heywood)
McAllister, G.


Champion, A. J.
Grenfell, D. R.
McEntee, V. La T.


Chetwynd, G. R.
Grey, C. F.
McGhee, H. G.


Cluse, W. S.
Grierson, E.
McGovern, J.


Cobb, F. A.
Griffiths, Rt. Hon. J. (Llanelly)
Mack, J. D.


Cocks, F. S.
Guest, Dr. L. Haden
McKay, J. (Wallsend)


Coldrick, W.
Gunter, R. J.
McKinlay, A. S.


Collick, P.
Guy, W. H.
Maclean, N. (Govan)


Collindridge, F.
Hale, Leslie
McLeavy, F.


Collins, V. J.
Hall, Rt. Hon. Glenvil
MacMillan, M. K. (Western Isles)


Colman, Miss G. M.
Hamilton, Lieut.-Col. R.
MacPherson, Malcolm (Stirling)


Cook, T. F.
Hardy, E. A.
Macpherson, T. (Romford)


Corbel, Mrs. F. K. (Camb'well, N. W.)
Harrison, J.
Mainwaring, W. H.


Corlett, Dr. J.
Hastings, Dr. Somervills
Mallalieu, E. L. (Brigg)







Mallalieu, J. P. W. (Huddersfield)
Proctor, W. T.
Titterington, M. F.


Mann, Mrs. J.
Pryde, D. J.
Tolley, L.


Manning, Mrs. L. (Epping)
Pursey, Comdr. H.
Tomlinson, Rt. Hon. G.


Mathers, Rt. Hon. George
Randall, H. E.
Ungoed-Thomas, L.


Mellish, R. J.
Ranger, J.
Usborne, Henry


Messer, F.
Rankin, J.
Viant, S. P.


Middleton, Mrs. L.
Reid, T. (Swindon)
Walker, G. H.


Mitchison, G. R.
Rhodes, H.
Wallace, G. D. (Chislehurst)


Monslow, W.
Richards, R.
Wallace, H. W. (Walthamstow, E.)


Moody, A. S.
Ridealgh, Mrs. M.
Warbey, W. N.


Morley, R.
Robinson, Kenneth (St. Pancras, N.)
Watkins, T. E.


Morris, Lt.-Col. H. (Sheffield, C.)
Ross, William (Kilmarnock)
Watson, W. M.


Nally, W.
Royle, C.
Webb, M. (Bradford, C.)


Naylor, T. E.
Sargood, R.
Wells, P. L. (Faversham)


Nichol, Mrs. M. E. (Bradford, N.)
Scollan, T.
Wells, W. T. (Walsall)


Noel-Baker, Capt. F. E. (Brentford)
Scott-Elliot, W.
West, D. G.


Noel-Buxton, Lady
Sharp, Granville
Wheatley, Rt. Hon. John (Edin'gh, E.)


O'Brien, T.
Shurmer, P.
White, H. (Derbyshire, N. E.)


Oldfield, W. H.
Silkin, Rt. Hon. L.
Whiteley, Rt. Hon. W.


Oliver, G. H.
Simmons, C. J.
Wilcock, Group-Capt. C. A. B.


Orbach, M.
Skinnard, F. W.
Wilkins, W. A.


Paget, R. T.
Smith, C. (Colchester)
Willey, F. T. (Sunderland)


Paling, Rt. Hon. Wilfred (Wentworth)
Smith, H. N. (Nottingham, S.)
Williams, D. J. (Neath)


Paling, Will T. (Dewsbury)
Smith, S. H. (Hull, S. W.)
Williams, J. L. (Kelvingrove)


Palmer, A. M. F.
Sorensen, R. W.
Williams, Ronald (Wigan)


Pargiter, G. A.
Soskice, Rt. Hon. Sir Frank
Williams, W. T. (Hammersmith, S.)


Parker, J.
Sparks, J. A.
Williams, W. R. (Heston)


Parkin, B. T.
Steele, T.
Willis, E.


Paton, Mrs. F. (Rushcliffe)
Strauss, Rt. Hon. G. R. (Lambeth)
Wills, Mrs. E. A.


Paton, J. (Norwich)
Stubbs, A. E.
Wilmot, Rt. Hon. J.


Pearson, A.
Swingler, S.
Woodburn, Rt. Hon. A.


Piratin, P.
Symonds, A. L.
Woods, G. S.


Popplewell, E.
Taylor, H. B. (Mansfield)
Yates, V. F.


Porter, E. (Warrington)
Taylor, R. J. (Morpeth)



Porter, G. (Leeds)
Thomas, D. E. (Aberdare)
TELLERS FOR THE NOES:


Price, M. Philips
Thorneycroft, Harry (Clayton)
Mr. Joseph Henderson and


Pritt, D. N.
Timmons, J.
Mr. Hannan.

New Clause.—(AMENDMENT TO FINANCE ACT, 1936, s. 8.)

Subsection (1) of section eight of the Finance Act, 1936, which enables the Treasury by licence to authorise the duty-free importation of goods for purposes connected with science, art or sport, shall have effect with the substitution for paragraphs (a) and (b) of the following paragraphs:—

"(a) the goods are intended to be used in scientific or industrial research, or for a purpose connected with the advancement of any branch of learning or art or the promotion of any sport;
(b) the goods are not intended to be sold or to be disposed of in the course of any transaction which is substantially a commercial transaction."—[Mr. R. A. Butler.]

Brought up, and read the First time.

M. R. A. Butler: I beg to move, "That the Clause be read a Second time."
The object of this new Clause is to exempt from import duty certain materials imported for commercial research purposes. It is a technical and, I think, important small Clause. It so happens that goods intended for scientific research are already treated in the sort of way I should like goods for commercial research and investigation to be treated. In the case of goods used for scientific research the exemption is limited to materials and goods used by academic

research institutions, but goods wanted for commercial research are excluded. That does not seem a very satisfactory arrangement, because there are certain matters which could be introduced for commercial research purposes which would very much help some of our leading companies in industry at present, and which would help our production drive. I therefore very sincerely put forward this Clause for the attention of the Financial Secretary. I do not myself see, as goods for scientific research are included under suitable conditions, why the Clause should not be conceded.
The present arrangement for goods for scientific research is governed by enabling legislation. The Treasury remains the competent authority to decide on the merits of each case, and in this Clause we propose that the present enabling legislation should be extended to cover the sort of materials I have in mind; discretion as to the decision on the application should, in our view, rest with the Treasury. Our object in introducing this Clause, therefore, is not to impose an immense charge upon the Exchequer, because although I am not able to compute it I should imagine the charge was very little; nor is it with the object of helping particular people to serve their own ends, because we would intend to


leave the final discretion to the Treasury. It is, however, to assist the importation of, for example, certain samples of fibres, which might be brought in for commercial research here, which might illustrate improved manufacturing techniques abroad; or examples of textile manufactures illustrating the use of fabrics and particular forms of yarn abroad; or samples of dye-stuffs which could be used and tested for commercial purposes here.
I believe this to be a new Clause to which there can be no objection in principle. If the Government have the last word I do not see how it can be abused. If we add to these two considerations my belief that the cost will not be very great I cannot see what arguments there are against it, taking into consideration the fact that we must produce absolute skill to compete in the buyers' market and to improve our general production at present. In view of the arguments that I have attempted to put forward, I hope the Financial Secretary will see his way to concede this point. I am grateful for the opportunity of discussing it on Report, because it was not a point which could be considered in Committee, which was a great disappointment to us.

Mr. Glenvil Hall: I am sorry, but I must invite the House to say "No" to this new Clause, although it has been very persuasively moved by the right hon. Gentleman. It is rather difficult to say why one type of goods can come in duty free while a bar is put up on what would appear to be almost the same type, simply because those importing the goods are, in one case, a research institute and, in the other case, a commercial firm. If I understood the argument aright, in both cases the object of the importation is that it should be used for research purposes in order to improve a particular industry or business and make it more efficient. The Clause does nothing more than include among the objects to which Section 8 (1) of the Finance Act, 1936, was designed to apply, goods which are brought in for industrial research, so we can confine our discussion to whether it is or is not possible to bring in goods of that kind without hurt.
This provision dated from 1936, when a Conservative Government were in office. When a Conservative Government, which were not hostile in any way

to commercial activity or industrial business, made a provision of this kind and excluded industrial research from the provisions of the Section, we must assume that it was for a very good reason. On reflection, the House will see that that still obtains. For one thing it is very difficult, when we go outside the field of non-profit making research and step into the area of industrial research by firms eventually hoping, as the result of the processes they are carrying out, to make a profit, to know where to draw the line. Much of the equipment for industrial research that would be brought in is similar, if not identical, to the kind of equipment that is found in industrial laboratories or on premises being used for ordinary profit-making commercial purposes.
It would be difficult—I use the word advisedly—to police this concession if it were granted, because it would be impossible by definition to know what to omit and what to include. The right hon. Gentleman said that it would cost very little, and that is true. That is an argument which he advanced for permitting the concession. It is also an argument for not permitting the concession, because it is quite obvious—and we have discussed this with the Board of Trade—that industry is not really hampered by having to pay on goods imported in this way. If a case could be made out showing that it meant a great financial difference to firms to have up-to-date equipment for industrial research, and which would enable them to be more efficient, I think my right hon. and learned Friend would be willing to look at this again. It is our view—and the right hon. Gentleman underlined it by what he said—that the cost of putting such duty on such equipment is so infinitesimal that it does not seem worth while making the concession. It would open difficulties for those who have to implement this provision when the goods are imported.
In those circumstances, it would be wise for the House to stand by what the Conservative Government thought right and proper in 1936—to draw this distinction between commercial and non-commercial products or equipment coming in for profit-making purposes or for nonprofit making purposes. The equipment, when it does come in, is used in these research institutions and anything that


happens as a result of the research carried out is made available to all others. Industry generally can take advantage of the results of such research, whereas if we allow any firm or industry—I am not complaining of this—to bring in these things duty free they would take advantage of it for their own commercial profit. For those reasons the House would be well advised not to accept this Clause.

Lieut.-Commander Braithwaite: I am sure my hon. Friends have been deeply touched and affected by the appeal by the right hon. Gentleman to stand by the action of a Tory Government between the wars, but the rest of his comments give rise to some criticism. First of all, the right hon. Gentleman has told us that the impact of these duties upon industry would be infinitesimal. By the same token, the cost to the Exchequer of making the concession would obviously be infinitesimal. I feel that the right hon. Gentleman's speech is not only a grievous disappointment to the House but also to the Chancellor of the Exchequer. I wish the right hon. and learned Gentleman had been here to listen to it, because it runs entirely counter to the apologia to which he treated us after Questions this afternoon. After all, what was the burden of the Chancellor's song, if it could be called a song, though unlike his predecessor he does not have a song in his heart? What was his story? It was that everything possible should be done to reduce expenditure. I realise that the right hon. Gentleman was reading from a brief which was prepared for him, but there was time for a little adjustment.
Here is something which is small, but what a gesture it would have been, coming on the same day as the Chancellor's appeal to industry, Government Departments and everyone else to realise the extreme peril of our industrial position, and to encourage the export drive. I see the hon. Member for King's Norton (Mr. Blackburn) below the Gangway, and I hope we shall be able to enlist his support for this admirable Clause, because no one has taken a greater interest than he in research matters. He is always pleading for modern research.
The right hon. and learned Gentleman has appealed to the research departments of our great industries to make themselves

as up to date as possible. Had he seen his way to make this concession—a minor one, in terms of revenue—for the admirable purpose of the importation of articles and goods which are required solely for research, the results of which spread not merely throughout one industry but elsewhere, and even to the Dominions, it would have been something really worth doing in view of what we have been told this afternoon.
7.30 p.m.
May I say something else to the right hon. Gentleman? This is not 1936. He claimed to support something which was done by a previous Government, in 1936, but that Government did not get into the mess with which we are now confronted. The situation is entirely different. In 1936, we were still menaced by the danger of foreign dumping in this country. The Import Duties Act of 1932 and the Ottawa Agreements which followed were all part of an economic structure to meet the danger with which the country was then confronted.
What a different picture today. We see the closing of doors all over the world against our goods, as a consequence of Socialist extravagance leading to high costs of production. [HON. MEMBERS: "Nonsense."] I hope hon. Members opposite will not accuse the Chancellor of the Exchequer of talking nonsense. I hope they will accept the words of the Chancellor—until he is thrown overboard in a few months' time—and the fact that this country has never been in such a position, because of our costs of production. Here is a Clause which would help to reduce costs of production, at a small loss of revenue. The Financial Secretary has lost a very fine opportunity, in point of timing and psychology, to follow up what his right hon. and learned Friend said this afternoon. Hardly are the words out of the Chancellor's mouth than the Financial Secretary turns his right hon. and learned Friend down.

Mr. Erroll: The Financial Secretary resisted our proposed Clause on two main grounds. The first was that the amount of money which would be saved to individual firms would be so small as not to be of any value to them. The second was that there would be a temptation to widespread abuse. It is to those two points that I


would like to direct the attention of the House.
We are up against the difficulty that if we suggest a big relief for industry we are told that the cost will be prohibitive and if we suggest a smaller relief for industry we are told that it is so small as not really to be worth bothering about. Perhaps somebody on the Government side will tell us what sort of scale of relief the Government would be prepared to consider. We could then try to prepare an amended Clause. However small the relief may be, it is a relief and should not be lightly dismissed because of its size. I hope that the suggestion will not pass without further attention.
The second matter which is of importance is the Financial Secretary's point that there would be abuse, and a temptation to manufacturers to import goods ostensibly for research but in reality to avoid the payment of Customs and Excise Duty and of Purchase Tax. The Financial Secretary does less than justice to the honesty and integrity of the business firms of this country. That is not the sort of practice which would be indulged in. It might have been done in the 19th century, before the Labour Party was in existence. I know that they are always anxious to dig up examples from the remote past. Surely the Financial Secretary knows that business firms are anxious to operate with honesty, decency and enthusiasm any system which they are called upon to operate. If he has any doubt about that, he has only to look at the way in which the business world is operating P.A.Y.E. to see that there is no dishonesty or graft there.
I cannot believe that a firm with a research department would use licences of the type that we have suggested just to get a small importation of goods duty free I do not think that is in the least likely, and I challenge the Financial Secretary to give an example from the Customs and Excise Department of a firm of repute owning a research department which would stoop to such a practice. At a time when we are depending upon the productive efforts of industry, we should be very slow to condemn of sneer at the honesty or integrity of business executives.

Mr. Gallacher: The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) advanced a very good and intelligent argument, but the concluding part of his speech was enough to destroy it. If it were in Order, I think we could knock him about all over the Floor of the House. I am getting a little bit mystified. I listened to the right hon. Member for Saffron Walden (Mr. R. A. Butler), who introduced the Education Act, 1944. I have a very high regard for his conduct in connection with that Act. He has always something interesting to say. I remember his remarks last week on education, when he said that education reflected the prevailing conditions of society. That is good Marxism. On a previous new Clause this evening, he said that the crisis would force the middle classes out of existence. That is good Marxism. I would say to him: keep it up.
On this side of the House, what do we get? The hon. and gallant Member for Holderness said that the Chancellor had made a speech this afternoon saying that everything must be done to reduce costs and increase efficiency. If that should be put to the vote, everybody on this side of the House will march into the Lobby against it. We have already done something similar. At the Labour Party Conference the Lord President of the Council said: "I and my party will protect the middle classes"; and if hon. Members look at the pamphlet "Labour Believes in Britain," they will see the same thing; yet on the previous new Clause we went into the Lobby against the middle classes. I do not know what the Minister is going to do about the proposed Clause and whether he is going to accept the proposition that is made in it and give the proposed encouragement to the efficiency of industry. If he does not, and there is a Division, hon. Members on this side of the House will go marching into the Lobby to deliver, if not a knockout, at any rate a nasty blow to the Chancellor of the Exchequer.

Viscount Hinchingbrooke: My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) dealt faithfully with the two arguments of the Financial Secretary. I wish only to add a point on one of the things that the right hon. Gentleman said. I cannot understand why the Financial Secretary takes one view about


the importation of goods for scientific research and another view about the importation of goods for industrial or commercial research. He seems to fear that the moment we get into the area of profit, there is a risk of one firm playing off another, or that an invidious distinction would have to be made by the Treasury. The moment we get past the importation of scientific apparatus for some central organisation which is non-profit making and, I suppose, Governmentally chaperoned, into commerce, we incur very great risks. I cannot see why that should be the case.
If we lighten a duty, everybody in commerce has the opportunity to get goods through under the lessened duty. If we give the Treasury permission, through licence, to declare certain goods exempt from duty or in a category of lower duty, it is up to the commercial firms to come forward and make their applications independently. We do not say that each separate institution should go to the Treasury and say, "I wish all my commercial research appliances to be exempted from a certain duty," and that the Treasury shall decide as between one firm and another. We suggest that a general application may be made and the Treasury shall issue an Order saying that a certain class of goods will be subject to a lower duty. Where is the invidious distinction between one firm and another?
I suggest that the reason why the Conservative Party in 1936 made a differentiation between scientific research and commercial research was that at that time, as one of my hon. Friends said, we were stepping up duties all round, but now the Conservative Party are on the other tack and we are trying to lower duties all round and free the trade of the country and the Empire. It is natural that we should wish to see individual firms given an opportunity of acquiring goods for research so that they can be in a position to compete against each other and lower their costs of production—the Chancellor invited us to do so this afternoon—and so contribute to a greater flow of trade and the better financial position of the country.

Mr. Blackburn: The noble Lord the Member for South Dorset (Viscount Hinchingbrooke) will understand the motives for

my saying that as the next electoral battle approaches, I find myself more and more unwilling to disagree with my right hon. Friends on the Front Bench and more and more willing to disagree with right hon. and hon. Gentlemen opposite. Therefore, I am this evening in the somewhat embarrassing position of giving my full support, so far as I am able, to my right hon. Friend but disagreeing entirely with all the arguments which he put forward, which were, of course, Conservative arguments introduced in 1936.
The remarks offered to the House by the hon. Member for West Fife (Mr. Gallacher) were justified. We are in a situation, as the Chancellor explained after Question Time today, in which the future of the country depends upon more efficient production. Here is a Clause designed to see that all goods for industrial research are brought into the country duty free. The only argument of substance put by my right hon. Friend was this: he said that it is impossible for us so to define goods intended for use for the purposes of industrial research, that other goods will not easily be brought within the same category by business men, thereby opening the floodgates to a large amount of goods. Surely that is only a question of getting the right definition. I am sorry that my right hon. and learned Friend the Solicitor-General is not here, but I suggest straight away that we might amend these words to read something like this, "Goods for use in scientific or industrial research." It would then be possible for the Treasury to say in relation to any item of goods, "No, these are not goods for use in scientific or industrial research."
I must tell the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) that I find the drafting of the Clause very difficult, and that if I had to vote I could certainly find many reasons for voting against the Clause. For instance, he proposes to authorise the duty-free importation of goods for the promotion of any sport. I do not see how anybody could seriously suggest that we should exempt from duty American golf balls. American golf balls are goods for the promotion of golf, but why should they come in duty-free? There is also the category connected with the advancement of any branch of learning or art. I cannot see why industrial research


should be muddled up with the advancement of art or the promotion of sport. They seem to me to be three entirely separate subjects, and the remarks I am offering this evening are limited to the problem of industrial research.

Mr. Glenvil Hall: My hon. Friend should realise that these articles must not be sold. There would be no point in American golf balls coming in if they could not be sold. They could only be used for a golf match or something of that kind.

Mr. Blackburn: I appreciate that point, but I still do not see why we should want to exempt American golf balls from duty. I do not see the connection between sport and science. It seems an extreme attitude of mind.

7.45 p.m.

Mr. Eccles: The hon. Gentleman probably does not realise that these goods may be brought in for the purpose of a match. A rowing team may bring its own boat or oars, and commerce does not enter into that case. I should have thought that the hon. Gentleman might have agreed that it is hard to levy a duty in such a case, though no doubt the money can be handed back administratively.

Mr. Blackburn: I appreciate that point, but I do not see why the three subjects are lumped together in the Clause.

Mr. Eccles: They were together in the original Act.

Mr. Blackburn: Then our legislators in 1936 must have considered atomic energy to be on a level with golf balls, although they seem to me to be entirely

separate matters and should not be lumped together.

Here is an instance which I hope will not appear to be too far-fetched. We are all very glad to know that the Mayo Institute has now developed Compound E, which is of great value in the treatment of rheumatism and rheumatic fever. Why should not those who are responsible for producing Compound E in this country—I am informed that it will be years before we can produce it here for the relief of the millions who are suffering from rheumatism today—be able to import duty-free from the United States all the apparatus which is needed for research in order to ensure that we produce Compound E at the earliest possible moment? That is an example connected with the alleviation of disease; hundreds of other examples could be given.

Mr. Gallacher: And it would increase production.

Mr. Blackburn: Yes, it would increase production, as the hon. Member has said. I sincerely hope that the hon. Member's efforts to increase our production will be echoed in future by the "Daily Worker" and the other organs which support the hon. Member's party. I hope we may discover the hon. Member and his party blazoning the way, along with the progressive Members of the House, and urging my right hon. Friend once again to show how magnanimous he is by indicating that the Treasury will take account of the views which have, been expressed on all sides of the House—by Conservative, Cummunist, Labour and, I hope, Liberal Members.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 109; Noes, 254.

Division No. 200.]
AYES
[7.50 p.m.


Agnew, Cmdr. P. G.
Davidson, Viscountess
Granville, E. (Eye)


Amory, D. Heathcoat
De la Bèra, R.
Grimston, R. V.


Assheton, Rt. Hon. R.
Digby, Simon Wingfield
Hannon, Sir P. (Moseley)


Astor, Hon. M.
Dower, E. L. G. (Caithness)
Harris, F. W. (Croydon, N.)


Barlow, Sir J.
Drewe, C.
Harris, H. Wilson (Cambridge Univ.)


Bennett, Sir P.
Duthie, W. S.
Harvey, Air-Comdre. A. V.


Boles, Lt.-Col. D. C. (Wells)
Eccles, D. M.
Headlam, Lieut.-Col. Rt. Hon. Sir C.


Bower, N.
Eden, Rt. Hon. A.
Henderson, John (Cathcart)


Braithwaite, Lt.-Comdr J. G.
Elliot, Lieut.-Col. Rt. Hon. Walter
Hinchingbrooke, Viscount


Brown, W. J. (Rugby)
Erroll, F. J.
Hogg, Hon. Q.


Buchan-Hepburn, P. G. T.
Fletcher, W. (Bury)
Holmes, Sir J. Stanley (Harwich)


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Fox, Sir G.
Hope, Lord J.


Carson, E.
Fyfe, Rt. Hon. Sir D. P. M.
Hulbert, Wing-Cdr. N. J.


Clarke, Col. R. S.
Galbraith, Cmdr. T. D. (Pollok)
Hutchison, Lt-Cdr Clark (Edin'gh, W.)


Crookshank, Capt. Rt. Hon. H. F. C.
Galbraith, T. G. D. (Hillhead)
Hutchison, Col. J. R. (Glasgow, C.)


Crosthwaite-Eyre, Col. O. E.
Gammams, L. D.
Jeffreys, General Sir G.


Darling, Sir W. Y.
Gomme-Duncan, Col. A.
Jennings, R.




Joynson-Hicks, Hon. L. W.
Medlicott, Brigadier F.
Spence, H. R.


Keeling, E. H.
Mellor, Sir J.
Stoddart-Scott, Col. M.


Lambert, Hon. G.
Morrison, Maj. J. G. (Salisbury)
Strauss, Henry (English Universities)


Lancaster, Col. C. G.
Morrison, Rt. Hon. W. S. (Cirencester)
Studholme, H. G.


Legge-Bourke, Maj. E. A. H.
Mott-Radclyffe, C. E.
Sutcliffe, H.


Lipson, D. L.
Neill W. F. (Belfast, N.)
Thorneycroft, G. E. P. (Monmouth)


Lloyd, Selwyn (Wirral)
Nield, B. (Chester)
Thornton-Kemsley, C. N.


Low, A. R. W.
Noble, Comdr A. H. P.
Thorp, Brigadier R. A. F.


MacAndrew, Col. Sir C.
Odey, G. W.
Touche, G. C.


McFarlane, C. S.
Peto, Brig. C. H. M.
Wakefield, Sir W. W.


Mackeson, Brig. H. R.
Ponsonby, Col. C. E.
Walker-Smith, D.


Maclay, Hon. J. S.
Price-White, Lt.-Col. D.
Watt, Sir G. S. Harvie


MacLeod, J.
Raikes, H. V.
Webbe, Sir H. (Abbey)


Macmillan, Rt. Hon. Harold (Bromley)
Rayner, Brig. R.
White, Sir D. (Fareham)


Macpherson, N. (Dumfries)
Renton, D.
Williams, Gerald (Tonbridge)


Maitland, Comdr. J. W.
Roberts, H. (Handsworth)
Yours Sir A. S. L. (Partick)


Manningham-Buller, R. E.
Ross, Sir R. D. (Londonderry)



Marlowe, A. A. H.
Sanderson, Sir F.
TELLERS FOR THE AYES:


Marples, A. E.
Shephard, S. (Newark)
Major Conant and


Marsden, Capt. A.
Smith, E. P. (Ashford)
Colonel Wheatley.


Marshall, D. (Bodmin)
Spearman, A. C. M.





NOES


Adams, Richard (Balham)
Dodds, N. N.
Jones, D. T. (Hartlepool)


Allen, A. C. (Bosworth)
Donovan, T.
Jones, Elwyn (Plaistow)


Allen, Scholefield (Crewe)
Driberg, T. E. N.
Jones, J. H. (Bolton)


Alpass, J. H.
Dugdale, J. (W. Bromwich)
Keenan, W.


Anderson, A. (Motherwell)
Dye, S.
Key, Rt. Hon C. W.


Attewell, H. C.
Ede, Rt. Hon. J. C.
King, E. M.


Austin, H. Lewis
Edelman, M.
Kinley, J.


Awbery, S. S.
Edwards, John (Blackburn)
Kirby, B. V.


Ayles, W. H.
Edwards, Rt. Hon. N. (Caerphilly)
Lang, G.


Bacon, Miss A.
Evans, John (Ogmore)
Lavers, S.


Baird, J.
Evans, S. N. (Wednesbury)
Lee, F. (Hulme)


Balfour, A.
Ewart, R.
Leslie, J. R.


Barstow, P. G.
Fairhurst, F.
Lewis, T. (Southampton)


Barton C.
Farthing, W. J.
Lindgren, G. S.


Battley, J. R.
Ferny bough, E.
Lipton, Lt.-Col. M.


Bechervaise, A. E.
Follick, M.
Longden, F.


Benson, G.
Foot, M. M.
Lyne, A. W.


Berry, H.
Forman, J. C.
McAdam, W.


Bing, G. H. C.
Fraser, T. (Hamilton)
McAlister, G.


Binns, J.
Freeman, J. (Watford)
McEntee, V. La T.


Blackburn, A. R.
Gallacher, W.
McGhee, H. G.


Blyton, W. R.
Ganley, Mrs. C. S.
McGovern, J.


Boardman, H.
Gibbins, J.
Mack, J. D.


Bottomley, A. G.
Gilzean, A.
McKay, J. (Wallsend)


Bowden, Flg. Offr. H. W.
Glanville, J. E. (Consett)
McKinlay, A. S.


Brook, D. (Halifax)
Greenwood, A. W. J. (Heywood)
Maclean, N. (Govan)


Brooks, T. J. (Rothwell)
Grenfell, D. R.
McLeavy, F.


Broughton, Dr. A. D. D.
Grey, C. F.
MacMillan, M. K. (Western Isles)


Brown, T. J. (Ince)
Grierson, E.
MacPherson, Malcolm (Stirling)


Bruce, Maj. D. W. T.
Griffiths, Rt. Hon. J. (Llanelly)
Macpherson, T. (Romford)


Burden, T. W.
Guest, Dr. L. Haden
Mainwaring, W. H.


Burke, W. A.
Gunter, R. J.
Mallalieu, E. L. (Brigg)


Butler, H. W. (Hackney, S.)
Guy, W. H.
Mallalieu, J. P. W. (Huddersfield)


Callaghan, James
Hale, Leslie
Mann, Mrs. J.


Carmichael, James
Hall, Rt. Hon. Glenvil
Manning, Mrs. L. (Epping)


Castle, Mrs. B. A.
Hamilton, Lieut.-Col. R.
Mathers, Rt. Hon. George


Champion, A. J.
Hannan, W. (Maryhill)
Mellish, R. J.


Chetwynd, G. R.
Hardy, E. A.
Messer, F.


Cluse, W. S.
Harrison, J.
Middleton, Mrs. L.


Cobb, F. A.
Hastings, Dr. Somerville.
Mitchison, G. R.


Cocks, F. S.
Haworth, J.
Monslow, W.


Coldrick, W.
Henderson, Joseph (Ardwick)
Moody, A. S.


Collick, P.
Herbison, Miss M.
Morley, R.


Collins, V. J.
Hobson, C. R.
Nally, W.


Colman, Miss G. M.
Holmes, H. E. (Hemsworth)
Naylor, T. E.


Cook, T. F.
Horabin, T. L.
Nichol, Mrs. M. E. (Bradford, N.)


Corlett, Dr. J.
Houghton, A. L. N. D. (Sowerby)
Noel-Buxton, Lady


Cove, W. G.
Hoy, J.
Oldfield, W. H.


Cripps, Rt. Hon. Sir S.
Hubbard, T.
Oliver, G. H.


Crossman, R. H. S.
Hudson, J. H. (Ealing, W.)
Orbach, M.


Cullen, Mrs.
Hughes, Emrys (S. Ayr)
Paget, R. T.


Daggar, G.
Hughes, Hector (Aberdeen, N.)
Paling, Rt. Hon. Wilfred (Wentworth)


Daines, P.
Hughes, H. D. (W'lverh'pton, W.)
Paling, Will T. (Dewsbury)


Dalton, Rt. Hon. H.
Hynd, H. (Hackney, C.)
Palmer, A. M. F.


Davies, Edward (Burslem)
Irvine, A. J. (Liverpool)
Pargiter, G. A.


Davies, Haydn (St. Pancras, S. W.)
Isaacs, Rt. Hon G. A.
Parker, J.


Davies, R. J. (Westhoughton)
Janner, B.
Parkin, B. T.


Deer, G.
Jay, D. P. T.
Paton, Mrs. F. (Rushcliffe)


de Freitas, Geoffrey
Jeger, G. (Winchester)
Paton, J. (Norwich)


Diamond, J.
Jeger, Dr. S. W. (St. Pancras, S. E.)
Pearson, A.


Dobbie, W.
Jenkins, R. H.
Piratin, P.







Popplewell, E.
Simmons, C. J.
Warbey, W. N.


Porter, E. (Warrington)
Smith, C. (Colchester)
Watkins, T. E.


Porter, G. (Leeds)
Smith, H. N. (Nottingham, S.)
Watson, W. M.


Price, M. Philips
Smith, S. H. (Hull, S. W.)
Webb, M. (Bradford, C.)


Pritt, D. N.
Sorensen, R. W.
Wells, P. L. (Faversham)


Proctor, W. T.
Soskice, Rt. Hon. Sir Frank
Wheatley, Rt. Hon. John (Edin'gh, E.)


Pryde, D. J.
Sparks, J. A.
White, H. (Derbyshire, N. E.)


Randall, H. E.
Steele, T.
Whiteley, Rt. Hon. W.


Rangar, J.
Strauss, Rt. Hon. G. R. (Lambeth)
Willey, F. T. (Sunderland)


Rankin, J.
Stubbs, A. E.
Williams, D. J. (Neath)


Reid, T. (Swindon)
Swingler, S.
Williams, J. L. (Kelvingrove)


Rhodes, H.
Symonds, A. L.
Williams, Ronald (Wigan)


Richards, R.
Taylor, H. B. (Mansfield)
Williams, W. T. (Hammersmith, S.)


Ridealgh, Mrs. M.
Taylor, R. J. (Morpeth)
Williams, W. R. (Heston)


Robens, A.
Taylor, Dr. S. (Barnet)
Willis, E.


Robinson, Kenneth (St. Pancras, N.)
Thomas, D. E. (Aberdare)
Wills, Mrs. E. A.


Ross, William (Kilmarnock)
Thorneycroft, Harry (Clayton)
Wilmot, Rt. Hon. J.


Royle, C.
Timmons, J.
Woodburn, Rt. Hon. A.


Sargood, R.
Titterington, M. F.
Woods, G. S.


Scollan, T.
Tolley, L.
Yates, V. F.


Scott-Elliot, W.
Tomlinson, Rt. Hon. G.
Young, Sir R. (Newton)


Sharp, Granville
Usborne, Henry



Shawcross, Rt. Hn. Sir H. (St. Helens)
Walker, G. H.
TELLERS FOR THE NOES:


Shurmer, P.
Wallaco, G. D. (Chislehurst)
Mr. Collindridge and


Silverman, J. (Erdington)
Wallace, H. W. (Walthamstow, E.)
Mr. Wilkins.

New Clause.—(CORPORATION DUTY.)

Section eleven of the Customs and Inland Revenue Act, 1885 (which imposes a duty on the property of certain bodies corporate or unincorporate subject to the exemptions specified therein), shall be construed as if the reference to property belonging to a body corporate or unincorporate established for any trade or business included a reference to property belonging to a body corporate or unincorporate which carries on any trade or business the profits of which are liable to income tax or profits tax.—[Lieut.-Commander Braithwaite.]

Brought up, and read the First time.

Lieut.-Commander Braithwaite: I beg to move, "That the Clause be read a Second time."
During the Committee stage we put down an Amendment to Clause 26 covering the main point which I now desire to raise, but owing to the fact that the Committee fell behind an agreed time-table, it was arranged that this matter was to be raised upon the Report stage. During the passage of the Bill through Committee, we had two interesting discussions, one on football pools and another on football professionals and their benefits. This new Clause will to some extent cover the financial position of football clubs and indeed sporting clubs as such.
The object which we have here is to exempt from Corporation Duty the property of any body which is liable for Profits Tax. It was that point which we should have raised on the Committee stage had the opportunity then arisen. There are many sporting clubs and associations which at the present time find themselves, under our present system of

taxation, liable both for Profits Tax and Corporation Duty. The point is perhaps slightly technical but is briefly as follows. If their funds are invested, they find that the Inland Revenue authorities charge Profits Tax on income therefrom where it has reached a sufficient height under Section 32 of the Finance Act, 1947; but such investment income, including that from any property the club may hold, is also subject to Corporation Duty at 5s. under the Customs and Inland Revenue Act, 1885. The exemption given under Section 11 (5) of that Act to bodies established for conducting a business is at present very narrowly applied by the Inland Revenue, and is given only where there is proof that the body in question had been originally set up for the conduct of a business.
8.0 p.m.
The difficulty which arises is this. It is hardly ever possible for sports clubs to prove, although they are treated as an industry or business for tax purposes, that they get charged Profits Tax as well; and so, on an income from investments and other property, sports clubs have to pay a Corporation Duty and Profits Tax, subject of course to abatement, and they also come in for Income Tax on the standard rates as reduced by the Profits Tax paid. I wish to suggest to the House that it is clearly inequitable to charge these clubs Profits Tax as business concerns, while at the same time charging them Corporation Duty as non-business concerns. That is the gravamen, of our complaint as set forth in this new Clause.
While I am placing this argument before the House, perhaps I may refer to the curious effect of Income Tax on a number of these clubs. I have before me an example of a football club of which I have had the honour to be vice-president for a good many years, the Barnet Club, a noted amateur club which plays in the Athenian League. I understand that they have been in touch with their Member, whom I hoped to see in his place to give me his support. I have here figures which go back for 18 years. I will not read them to the House because it is a very long list, but I will send the list to the right hon. and learned Gentleman because I think he will find it illuminating as the sort of thing which is liable to happen to football clubs. From the financial year 1931–32 up to now, this club has on four occasions only, finished on the right side and made a profit. It so happens that the two occasions when the profit has been substantial have both fallen in this post-war period, the reason being that on these two occasions the club managed to get as far as the final tie of the Amateur Cup played before about 50,000 spectators at Stamford Bridge, Chelsea. They got a high rake-off of £963 in the 1945–46 season and £908 in the 1947–48 season.
After long years of playing these competitions, they have at last managed twice within three years to make a substantial profit, but it so happens that they have had the misfortune to make it when Income Tax is standing at the high level of today. Football clubs, when they are confronted with Income Tax demands, cannot of course claim allowances. They have no wives or children, and certainly they have no unrelated beneficiaries, a subject we were discussing the other day. What they seek to do, when they find themselves in this fortunate position of having more money coming in as a result of their success on the playing fields, is to put that money to ground improvements of one kind or another. Amateur clubs have no paid officials, with the exception of a groundsman to look after the pitch. None of their officials or players participate in these profits, and it is a little unfortunate at a time when Income Tax falls so heavily on them that there should be this anomaly which I have endeavoured to outline to the House.
I hope the Solicitor-General will feel that there is here a real case for sympathetic review. In a way, I think it is unfortunate that the time-table on the Committee stage got into such a position that we could not raise this matter then, because I have the feeling that if we could have deployed the argument then, it would have been looked into and on Report stage the Government might have been able to meet us. Instead, they are confronted for the first time with the case I have endeavoured to put forward, I am afraid inadequately, although some of my hon. Friends will be speaking later on the new Clause. I suggest that here is a matter that might engage the attention of the right hon. and learned Gentleman.

Mr. Erroll: I beg to second the Motion so admirably moved by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite).
I am quite sure that when the Corporation Duty was originally introduced in the 19th century, it was never envisaged there would later on be a Profits Tax which could be levied as well. It seems quite obvious that this anomaly, and it can be no more than an unintentional anomaly—should not be allowed to hamstring, not those who normally make large profits, but a worthwhile group of institutions because they are successful in the financial management of their affairs, a group of institutions which everybody concedes are playing a useful part in our national life. It seems particularly unfortunate that these clubs and sporting institutions should find they are liable to this supernumerary tax which represents a small additional burden that is inequitable, to say the least.
The position is really made worse by the narrow interpretation placed by the Inland Revenue on what constitutes a business for the purposes of obtaining exemption from Corporation Duty. I understand that all businesses within the narrow definition may claim exemptions from Corporation Duty, but that a body desirous of coming within the scope of that definition has to show that it was originally founded for the express purpose of carrying on a business and has done so ever since, whereas most sporting clubs, although they may be run on sound business lines, were not for the main part originally brought into being solely for


the purpose of carrying on a business out of their sporting activities, and therefore fail to qualify for an exemption.
If the Chancellor of the Exchequer cannot see his way to accept this new Clause, I hope it will be possible for him to instruct the Inland Revenue to work to a wider definition of a business and thus afford a relief which is very much needed. It would not be a very expensive relief for the Treasury, but it would remove an anomaly which I am sure was never intended when the original legislation was introduced.

The Solicitor-General: I cannot help thinking that this new Clause has been moved under a misapprehension of the true purposes of the nature of the Corporation Duty. The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite), in propounding his argument, said there was an anomaly in that a football club was taxed to Profits Tax as a trading concern carrying on a business and at the same time to Corporation Duty on the basis that it was a non-trading concern. This tax, as the hon. and gallant Gentleman told the House, was imposed by Section 11 of the Customs and Inland Revenue Act, 1885, for a specific purpose—to compensate the Exchequer in cases where property held by corporations and unincorporated bodies could not be liable to Estate Duty on the basis that it was not owned by individuals who could die. The purpose of the tax was to compensate the Exchequer for not getting Estate Duty on the property owned by such corporations.
A corporation whose capital is not divided into shares, such as a City Livery company, obviously can never suffer Estate Duty upon its property, whereas a company which is owned in shares has shareholders and when they die, their shareholdings pass as part of their estate and accordingly become liable to Estate Duty and to Succession or Legacy Duty. Therefore, inasmuch as the Exchequer could never obtain Estate Duty upon the property of corporations whose capital was not divided into shares, this tax was imposed in 1885. If I may quote the actual words used in Section 11, hon. Members will see that the specific and express purpose of the legislature was to compensate the Exchequer in that way. These are the words:

Whereas certain property, by reason of the same belonging to or being vested in bodies corporate or unincorporate, escapes liability to probate, legacy, or succession duties, and it is expedient to impose a duty thereon by way of compensation to the revenue.
And then it proceeds to impose the duty.
Section 11 also contains certain specific exemptions designed to take out of the scope of the tax the property of corporations in respect of which Estate Duty could become chargeable. Therefore, if one looks at the relevant exemption for the purpose of this new Clause, subsection (5), one finds that the following is exempted from the scope of the tax:
Property belonging to or constituting the capital of a body corporate or unincorporate established for any trade or business, or being the property of a body whose capital stock is so divided and held as to be liable to be charged to legacy duty or succession duty.
Therefore, the purpose of the exemption is to take out of the scope of the tax trading corporations whose capital is held in stocks and shares in such a way that it is owned by individuals who can die, and upon whose estates duty will be charged, including that part of their estate which consists of the shares of those corporations.
In the case of the clubs mentioned by the hon. and gallant Gentleman, they do not come within that exemption because their property is held by corporations in respect of which Estate Duty can never be charged. Therefore, prima facie, there is no reason why they should come out of the scope of the Corporation Duty. The mere fact that incidentally they carry on some trade, or indeed a substantial trade, does not take them outside the scope of the tax unless they are clubs whose property can become subject to Estate Duty because it is owned by shareholders, that is, persons who have individual interests in the property of the company. So, in principle, there is no reason why this Clause should be accepted.
Corporation Duty is in no sense a substitute for, or an addition to, a tax on trading profits. It is not a tax on trading profits at all. It is a tax of 5 per cent.—the same rate as was fixed in 1885—charged upon the income from property belonging to these companies. It does not fall upon trading receipts as such,


but simply upon the investment income which they derive from property. That being so, where there is a club which is not established for trading—that was the expression used in the Act of 1885 to describe joint stock companies—and whose capital is not divided into shares, it comes plumb within the scope of the tax, and it should not be taken out of the tax because it carries on some trade and earns some trading receipts. The Profits Tax is a tax upon its trading receipts whereas this is a quite different tax charged on the investment income arising from the annual value of its property. If these clubs are taken out of the scope of the tax, the Revenue will not be compensated for the fact that the property of these clubs can never become subject to Estate Duty or to Legacy or Succession Duty. That is why, when I began my argument, I submitted that hon. Members opposite were under a misapprehension as to the nature and purpose of this tax, which is not an additional tax on trade—

8.15 p.m.

Mr. Selwyn Lloyd: rose—

The Solicitor-General: I will give way in a moment. There is no logical reason at all why an exception should be made in the case of these clubs when there is no principle according to which, in relation to the context of the taxation legislation, it could possibly be justified.

Mr. Selwyn Lloyd: I am trying to follow the argument of the right hon. and learned Gentleman. Would he be good enough to repeat what he said about exemptions, because I did not quite catch it.

The Solicitor-General: I am sorry if I did not make it clear. There are a series of exemptions in Section 11 of the 1885 Act, and Subsection (5) takes out of the scope of Section 11 corporations whose capital is divided into shares, with the result that the shares can be held by individuals and, when those individuals die, Estate Duty—or as was then the case, Legacy or Succession Duty—was charged upon the individual holdings of the shareholders of those companies. The companies which are excluded are joint stock companies, that is, companies whose capital is divided into shares and,

accordingly, can be held by individuals whose shareholdings on their death become liable to Estate Duty.
If the Clause is accepted, it means that for no justifiable reason in principle these clubs are taken out of the scope of the tax, no compensating charge is made, and the Revenue is simply faced with a loss, which is utterly unjustifiable having regard to the general purpose of the tax. For that reason, I ask the House to say that no case has been made out for excluding these clubs from the ambit of the tax.

Colonel J. R. H. Hutchison: May I add my voice in an appeal, even at this late hour, that something should be done in cases of this kind? The House is always rightly suspicious of any suspected case of double taxation, and in spite of what the right hon. and learned Gentleman has said, I still believe that this is a case of double taxation. We are dealing, not with a rapacious, profit-earning concern, but merely with one which is striving over a period to make ends meet.
The right hon. and learned Gentleman based his justification for the continuation of this Corporation Duty on the fact that no Estate Duty would become payable from an organisation of this kind. I speak subject to correction, and would like to learn from the right hon. and learned Gentleman if I am wrong. Is it not the case that under the Bill the Estate, Succession and Legacy Duties are being altered? Under the alterations which are to take place, can it still be contended that this kind of organisation would, under the Bill, still be liable to Estate Duty? If it would not still be liable to Estate Duty—this compensating duty which, the right hon. and learned Gentleman says, is a justification for its existence—then his argument falls to the ground.

The Solicitor-General: Perhaps I should have made that clear. I read out the provisions dealing with exemption, which finished with these words:
whose capital stock is so divided and held as to be liable to be charged to legacy duty or succession duty.
The whole purpose of the Clause which deals with Corporation Duty—Clause 27—is to make consequential amendments


by reason of the fact that we are including Legacy and Succession duty in Estate Duty. It does not alter the law in that sense. It simply makes the necessary amendments in the law, because we can no longer refer back to the words
as to be liable to be charged to legacy duty or succession duty …
since they are no longer applicable.

Colonel Hutchison: May I put this specific point to the right hon. and learned Gentleman? I am trying to follow whether his argument is in any way invalidated by the Bill as it is proposed it shall emerge. Do I understand him to say that a sporting club of the kind we are considering will be just as liable for Estate Duty under the Bill as it emerges as it was in the past, or is there any change in the position which would have obtained?

The Solicitor-General: The difficulty is that a sporting club such as has been described was not previously liable to Legacy or Succession Duty; that is to say, its property could not be liable to Succession or Legacy Duty in the event of a particular person dying; and no more can it be liable to Estate Duty. Therefore, its situation as far as liability to Estate Duty and Legacy and Succession Duty is concerned is exactly the same.

Colonel Hutchison: I am sorry I did not express the point clearly. What I meant to say was this. If Succession and Legacy Duty are disappearing all round an organisation of this kind, then the justification for compensating the Treasury because this particular organisation was not liable, while everything surrounding it was liable, for Succession and Legacy Duty might have some validity; but if Legacy and Succession Duty are being incorporated in Estate Duty, and all the surrounding and comparable concerns are now having their position altered, then the justification for Corporation Duty on the sporting clubs no longer remains.
If I am wrong, then surely the incidence of Profits Tax was never intended to refer to a concern which is not a profit-making concern or, at any rate, not a profit-distributing concern; and the reserves for the future which it is necessary for an organisation of this kind to provide should not, surely, be liable to the 10 per cent. undistributed Profits Tax. Whether a justification can be found for one of these taxes or for the other, there is no justification for both at the same time.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 117; Noes, 251.

Division No. 201.]
AYES
[8.25 p.m.


Agnew, Cmdr. P. G.
Fraser, Sir I. (Lonsdale)
Low, A. R. W.


Amory, D. Heathcoat
Fyfe, Rt. Hon. Sir D. P. M.
MacAndrew, Col. Sir C.


Assheton, Rt. Hon. R.
Galbraith, Cmdr. T. D. (Pollok)
McCorquodale, Rt. Hon. M. S.


Astor, Hon. M.
Galbraith, T. G. D. (Hillhead)
McFarlane, C. S.


Barlow, Sir J.
Gammans, L. D.
Mackeson, Brig. H. R.


Beamish, Maj. T. V. H.
Gomme-Duncan, Col. A.
Maclay, Hon. J. S.


Bennett, Sir P.
Granville, E. (Eye)
MacLeod, J.


Boles, Lt.-Col. D. C. (Wells)
Grimston, R. V.
Macmillan, Rt. Hon. Harold (Bromley)


Bower, N.
Hannon, Sir P. (Moseley)
Macpherson, N. (Dumfries)


Braithwaite, Lt.-Comdr. J. G.
Harris, F. W. (Croydon, N.)
Maitland, Comdr. J. W.


Brown., W. J. (Rugby)
Harris, H. Wilson (Cambridge Univ.)
Manningham-Buller, R. E.


Buchan-Hepburn, P. G. T.
Harvey, Air-Comdre. A. V.
Marlowe, A. A. H.


Butler, Rt. Hn. R. A. (S'ffr'n W'ld'n)
Headlam, Lieut.-Col. Rt. Hon. Sir C.
Marples, A. E.


Carson, E.
Henderson, John (Cathcart)
Marsden, Capt. A.


Channon, H.
Hinchingbrooke, Viscount
Marshall, D. (Bodmin)


Clarke, Col. R. S.
Hogg, Hon. Q.
Medlicott, Brigadier F.


Crookshank, Capt. Rt. Hon. H. F. C.
Holmes, Sir J. Stanley (Harwich)
Mellor, Sir J.


Crosthwaite-Eyre, Col. O. E.
Hope, Lord J.
Morrison, Maj. J. G. (Salisbury)


Cuthbert, W. N.
Hulbert, Wing-Cdr. N. J.
Morrison, Rt. Hon. W. S. (Cirencester)


Darling, Sir W. Y.
Hutchison, Lt-Cdr. Clark (Edin'gh, W.)
Mott-Radclyffe, C. E.


Davidson, Viscountess
Hutchison, Col. J. R. (Glasgow, C.)
Neill, W. F. (Belfast, N.)


De la Bère, R.
Jeffreys, General Sir G.
Nield, B. (Chester)


Digby, Simon Wingfield
Jennings, R.
Noble, Comdr. A. H. P.


Dodds-Parker, A. D.
Joynson-Hicks, Hon. L. W.
Odey, G. W.


Dower, E. L. G. (Caithness)
Keeling, E. H.
Peto, Brig. C. H. M.


Duthie, W. S.
Kerr, Sir J. Graham
Ponsonby, Col. C. E.


Eccles, D. M.
Lambert, Hon. G.
Price-White, Lt.-Col. D.


Eden, Rt. Hon. A.
Lancaster, Col. C. G.
Raikes, H. V.


Erroll, F. J.
Legge-Bourke, Maj. E. A. H.
Rayner, Brig. R.


Fletcher, W. (Bury)
Lennox-Boyd, A. T.
Renton, D.


Fox, Sir G.
Lipson, D. L.
Roberts, H. (Handsworth)


Fraser. H. C. P. (Stone)
Lloyd, Selwyn (Wirral)
Ross, Sir R. D. (Londonderry)




Sanderson, Sir F.
Sutcliffe, H.
Wheatley, Colonel M. [...] (Dorset. E.)


Shephard, S. (Newark)
Thorneycroft, G. E. P. (Monmouth)
White, Sir D. (Fareham)


Smith, E. P. (Ashford)
Thorp, Brigadier R. A. F.
Williams, C. (Torquay)


Spearman, A. C. M.
Touche, G. C.
Williams, Gerald (Tonbridge)


Spence, H. R.
Wakefield, Sir W. W.
Young, Sir A. S. L. (Partick)


Stoddart-Scott, Col. M.
Walker-Smith, D.



Strauss, Henry (English Universities)
Watt, Sir G. S. Harvie
TELLERS FOR THE AYES:


Studholme, H. G.
Webbe, Sir H. (Abbey)
Mr. Drewe and Major Conant.




NOES


Adams, Richard (Balham)
Fairhurst, F.
Maclean, N. (Govan)


Alexander, Rt. Hon. A. V.
Farthing, W. J.
McLeavy, F.


Allen, A. C. (Bosworth)
Fernyhough, E.
MacMillan, M. K. (Western Isles)


Allen, Scholefield (Crewe)
Field, Capt. W. J.
MacPherson, Malcolm (Stirling)


Alpass, J. H.
Fletcher, E. G. M. (Islington, E.)
Macpherson, T. (Romford)


Anderson, A. (Motherwell)
Follick, M.
Mainwaring, W. H.


Attewell, H. C.
Foot, M. M.
Mallalieu, E. L. (Brigg)


Austin, H. Lewis
Forman, J. C.
Mallalieu, J. P. W. (Huddersfield)


Awbery, S. S.
Fraser, T. (Hamilton)
Mann., Mrs. J.


Ayles, W. H.
Freeman, J. (Watford)
Manning, Mrs. L. (Epping)


Bacon, Miss A.
Gallacher, W.
Mathers, Rt. Hon George


Baird, J.
Ganley, Mrs. C. S.
Mellish, R. J.


Balfour, A.
Gibbins, J.
Messer, F.


Barnes, Rt. Hon. A. J.
Gitzean, A.
Middleton, Mrs. L.


Barstow, P. G.
Glanville, J. E. (Consett)
Mitchison, G. R.


Barton, C.
Grenfell, D. R.
Monslow, W.


Battley J. R.
Gray, C. F.
Moody, A. S.


Bechervaise, A. E.
Grierson, E.
Morley, R.


Benson, G.
Griffiths, Rt. Hon. J. (Llanelly)
Nally, W.


Berry, H.
Guest, Dr. L. Haden
Naylor, T. E.


Bing, G. H. C.
Gunter, R. J.
Nichol, Mrs. M. E. (Bradford, N.)


Binns, J.
Guy, W. H.
Nicholls, H. R. (Stratford)


Blackburn, A. R.
Hale, Leslie
Noel-Buxton, Lady


Blenkinsop, A.
Hall, Rt. Hon. Glenvil
Oldfield, W. H.


Blyton, W. R.
Hamilton, Lieut.-Col. R.
Oliver, G. H.


Boardman, H.
Hannan, W. (Maryhill)
Orbach, M.


Bottomley, A. G.
Harrison, J.
Paget, R. T.


Bowden, Fig. Offr. H. W.
Hastings, Dr. Somerville
Paling, Will T. (Dewsbury)


Brook, D. (Halifax)
Haworth, J.
Palmer, A. M. F.


Brooks, T. J. (Rothwell)
Henderson, Joseph (Ardwick)
Pargiter, G. A.


Broughton, Dr. A. D. D.
Herbison, Miss M.
Parker, J.


Brown, T. J. (Ince)
Holmes, H. E. (Hemsworth)
Parkin, B. T.


Bruce, Maj. D. W. T.
Horabin, T. L.
Paton, Mrs. F. (Rushcliffe)


Burden, T. W.
Houghton, A. L. N. D. (Sowerby)
Paton, J. (Norwich)


Burke, W. A.
Hoy, J.
Pearson, A.


Butler, H. W. (Hackney, S.)
Hubbard, T.
Popplewell, E.


Callaghan, James
Hudson, J. H. (Ealing, W.)
Porter, E. (Warrington)


Carmichael, James
Hughes, Emrys (S. Ayr)
Porter, G. (Leeds)


Champion, A. J.
Hughes, Hector (Aberdeen, N.)
Price, M. Philips


Chetwynd, G. R.
Hughes, H. D. (W'lverh'pton, W.)
Pritt, D. N.


Cluse, W. S.
Hynd, H. (Hackney, C.)
Proctor, W. T.


Cobb, F. A.
Irvine, A. J. (Liverpool)
Pryde, D. J.


Cocks, F. S.
Isaacs, Rt. Hon. G. A.
Randall, H. E.


Coldrick, W.
Janner, B.
Ranger, J.


Collick, P.
Jay, D. P. T.
Rankin, J.


Collins, V. J.
Jeger, G. (Winchester)
Reid, T. (Swindon)


Colman, Miss G. M.
Jeger, Dr. S. W. (St. Pancras, S. E.)
Rhodes, H.


Cook, T. F.
Jenkins, R. H.
Richards, R.


Corlett, Dr. J.
Jones, D. T. (Hartlepool)
Robinson, Kenneth (St. Pancras, N.)


Cove, W. G.
Jones, Elwyn (Plaistow)
Ross, William (Kilmarnock)


Cripps, Rt. Hon. Sir S.
Jones, J. H. (Bolton)
Royle, C.


Cullen, Mrs.
Keenan, W.
Sargood, R.


Daggar, G.
Kenyon, C.
Scollan, T.


Daines, P.
Key, Rt. Hon C. W.
Scott-Elliot, W.


Dalton, Rt. Hon. H.
King, E. M.
Shackleton, E. A. A.


Davies, Edward (Burslem)
Kinley, J.
Sharp, Granville


Davies, Haydn (St. Pancras, S. W.)
Kirby, B. V.
Shawcross, Rt. Hn. Sir H. (St. Helens)


Davies, R. J. (Westhoughton)
Lang, G.
Shurmer, P.


Deer, G.
Lavers, S.
Silverman, J. (Erdington)


de Freitas, Geoffrey
Lee, F. (Hulme)
Simmons, C. J.


Diamond, J.
Leslie, J. R.
Smith, C. (Colchester)


Dobbie, W.
Lewis, T. (Southampton)
Smith, H. N. (Nottingham, S.)


Dodds, N. N.
Lindgren, G. S.
Smith, S. H. (Hull, S. W.)


Donovan, T.
Lipton, Lt.-Col. M.
Snow, J. W.


Driberg, T. E. N.
Longden, F.
Sorensen, R. W.


Dugdale, J. (W. Bromwich)
Lyne, A. W.
Soskice, Rt. Hon Sir Frank


Dye, S.
McAdam, W.
Sparks, J. A.


Ede, Rt. Hon. J. C.
McAllister, G.
Steele, T.


Edelman, M.
McEntee, V. La T.
Stubbs, A. E.


Edwards, John (Blackburn)
McGhee, H. G.
Swingler, S.


Edwards, Rt. Hon. N. (Caerphilly)
McGovern, J.
Symonds, A. L.


Evans, John (Ogmore)
Mack, J. D.
Taylor, H. B. (Mansfield)


Evans, S. N. (Wednesbury)
McKay, J. (Wallsend)
Taylor, R. J. (Morpeth)


Ewart, R.
McKinlay, A. S.
Thomas, D. E. (Aberdare)







Timmons, J.
Webb, M. (Bradford, C.)
Williams, W. R. (Heston)


Titterington, M. F.
Wells, P. L. (Faversham)
Willis, E.


Tolley, L.
Wells, W. T. (Walsall)
Wills, Mrs. E. A.


Tomlinson, Rt. Hon. G.
Wheatley, Rt. Hon. John (Edin'gh, E.)
Woodburn, Rt. Hon. A.


Usborne, Henry
White, H. (Derbyshire, N. E.)
Woods, G. S.


Walker, G. H.
Whiteley, Rt. Hon. W.
Yates, V. F.


Wallace, G. D. (Chislehurst)
Willey, F. T. (Sunderland)
Young, Sir R. (Newton)


Wallace, H. W. (Walthamstow, E.)
Williams, D. J. (Neath)



Warbey, W. N.
Williams, J. L. (Kelvingrove)
TELLERS FOR THE NOES:


Watkins, T. E.
Williams, Ronald (Wigan)
Mr. Collindridge and


Watson, W. M.
Williams, W. T. (Hammersmith, S.)
Mr. Wilkins.


Question put, and agreed to.

New Clause.—(INCOME TAX ARREARS CANCELLATION.)

If an individual who receives a demand for arrears of income tax in respect of any years prior to the financial year commencing on the fifth day of April, nineteen hundred and forty-five, proves that during the relevant period he was serving in. His Majesty's Forces, and that the arrears relate solely to his Service emoluments, he shall be entitled to claim that such arrears be disregarded up to the amount of seventy-five pounds.—[Lieut.-Commander Braithwaite.]

Brought up, and read the First time.

8.30 p.m.

Lieut.-Commander Braithwaite: I beg to move, "That the Clause be read a Second time."
Doubtless the Chancellor of the Exchequer will have gleaned from his lieutenants that, during his absence in Paris, in the small hours of Wednesday morning last, a Debate took place on arrears of Income Tax on emoluments earned in the Fighting Services. Doubtless, also, he has studied the Debate and found that very strong feeling was exhibited on all benches and that the Debate in no sense of the word took a party line. Hon. Members on all sides exhibited disquiet on the matter. The Financial Secretary to the Treasury first met our requests with the reply that the matter would receive sympathetic administrative action. We had an example of the kind of sympathetic administrative action which might be expected when the hon. Member for Sowerby (Mr. Houghton) delivered a speech which should have appeared under the title, "Can I hinder you?"
With the exception of the hon. Member for Sowerby, hon. Members in the Committee showed themselves generally sympathetic to the idea that real hardship is incurred where Income Tax demands are being made on claims arising out of Service pay, going back, in many cases, as far as the financial year 1941–42. I ought to say that we have slightly altered the wording, which was quite

properly criticised on the last occasion by one or two hon. Gentlemen opposite on the grounds of lack of clarity. We have endeavoured to word the Clause to make it quite clear that we are seeking to exempt claims arising solely out of Service emoluments. The hon. Member for Sowerby made the point that it was possible during the financial year 1939–40 for Service pay and Service remuneration to get mixed up in the Income Tax returns.
I think, Sir, that I may refer to a proposed new Clause in the name of the hon. Member for Oldham (Mr. Hale), which you did not select and which appeared to be rather narrower than the Clause now before us. What the hon. Member for Oldham sought to do was to get rid of the claims arriving after 5th April this year. We still seek, on the wider issue, to get rid of claims which are, so to speak, pending, which have been received before that date.
In view of the rather long Debate we had on the last occasion, with which hon. Members will be fully familiar, I do not propose to recapitulate the case. I would rather express pleasure that on this occasion we have with us the right hon. and learned Gentleman. On the last occasion the Financial Secretary did retreat, after considerable pressure had been put upon him, and say that the matter would be referred to the Chancellor on his return. It was on that understanding that we then withdrew our proposal with a view to putting it down again on Report. I can only hope that that delayed action will have the required effect; that we shall hear from the right hon. and learned Gentleman that this irritating anomaly is to be removed and a load of anxiety lifted from the shoulders of those who served their country during the recent war.

Mr. A. R. W. Low: I beg to second the Motion.
I hope the right hon. and learned Gentleman and the House will forgive


me if I endeavour to emphasise one or two points which I dealt with on the previous occasion in the middle of the night. I am not wholly satisfied that I dealt with them in the middle of the night as well as I might deal with them shortly after dinner. I must preface my remarks, as did my hon. and gallant Friend on the last occasion, by saying that I have an interest; I am one of those unfortunate people who recently received a claim for arrears of Income Tax supposed to be due—I say supposed to be due—between the years 1941 and 1945.
What is the position about Income Tax on the emoluments which those of us, both in the House and outside, received as serving officers during the recent war? I think it was generally understood—I hope the Chancellor agrees—that it was the duty of the Paymaster, before paying us any money or emoluments of any kind whatsoever, to deduct at source the Income Tax due on those emoluments. If I am correct, I think we all took it that the proper amount of Income Tax had been paid, or would be paid in the month immediately after the pay became due to us. Indeed, when our pay went up, or went down, the amount of Income Tax which was deducted changed, as of course it should have changed. If we were lucky enough to get back pay on promotion we noticed a large increase in the amount deducted.
Observing the pay slips—by no means all of which reached one because of the curious places to which one was from time to time forced to go—one might well be justified in assuming that all the tax which ought to have been paid had been paid; at any rate, all the tax except a minute sum. By a minute sum I mean something in the nature of shillings and pence rather than pounds. One certainly did not expect to find, eight years later, that the Inland Revenue had made a very big mistake. That is my first point: everyone was justified in assuming that proper deductions had been made.
My second point is that, even if one was not justified in that assumption, one was, in fact, in no position to check whether the right or wrong deductions had been made. That point was most ably put by the hon. Member for Nelson and Colne (Mr. S. Silverman) when we

last debated this topic. Moreover, one certainly is in no position now to discover whether or not one paid the proper amount of tax, because unfortunately, in most instances, the taxpayer is not in possession of the documents which show the amount of pay and other taxable emoluments which were alleged to have been paid to him in each of the months which go to make up the years for which he is now alleged to owe a certain amount of tax. It was impossible at the time to check what tax was due, and it is now impossible to check whether the Inland Revenue or the taxpayer is right.
I am quoting from my own experience which must be similar to the experience of many others. I am sure that the House will acquit me of wanting to press my own personal interests in this matter. I can say that I really do not know whether I am right in taking one view, or whether the Inland Revenue is right in taking another. I do not see how we can solve the difficulty. We certainly cannot solve it by having an action, and I should be the last person to want to bring one. The Inland Revenue always has the upper hand because, as the Chancellor knows, if a claim is proceeded with, the money will merely be taken by means of P.A.Y.E. in due course.
My third point concerns the long time which has elapsed since the officer or man left the Forces and closed his Service account. In many cases, men released in 1945 are receiving claims now, at the beginning of 1949, three and a half years after their Service accounts have been closed. Possibly, if they had any savings or a reasonable gratuity, they have-invested the money in their homes and now have nothing left upon which they may draw to satisfy the claims of the Inland Revenue even if the claims appear to be right.
My fourth point is that I realise full well that many men have paid the amount of tax which the Inland Revenue has claimed. Many paid immediately they received the assessment. It may be said that it would now be wholly unfair to them to allow others who have challenged a claim, or who have only just received one, to be relieved in any way. It may be that in absolute fairness that is so, but if the House comes to the conclusion that it is wrong, and indeed a great hardship


to ask men who have not so far paid, to pay now, four years after the war, surely they will not say, "The third conclusion which we have reached, fair in itself, is made unfair because certain people who have already paid might complain." I do not think it is in the nature of many people to complain because somebody else has got off rather better than they have. The opposite view is a wholly false reading of human nature in this country. I see hon. Gentlemen laughing, but I am glad to note that the Chancellor agrees with me and not with his hon. Friends below the Gangway.
8.45 p.m.
Having made those four points, I now want to put to the Chancellor a number of courses, one of which he might have decided to take. I do not know what he has decided to do about this Clause. He might decide, and I hope he has decided, to agree with my hon. and gallant Friend. He might have decided to agree with his hon. Friend the junior Member for Oldham (Mr. Hale). As I understood the effect of his proposal, it would be to release all who have not received claims before 5th April from any liability to pay the arrears of Income Tax on Service emoluments received during the war. The Chancellor may have decided to do either the one or the other of these two things, or he may have decided to do something very similar to what the hon. Gentleman proposed, rather than act on the lines of the proposal made by the hon. and learned Member for Northampton (Mr. Paget) during our previous discussion. That would be some remedy, though I hope he will decide to do something on the lines suggested by my hon. and gallant Friend to help those—and not just because I am one of them—who have received earlier settlements and who are probably a larger number than would be affected by the new Clause proposed by the hon. Member for Oldham but which, Mr. Deputy-Speaker, you did not call.
In any case, I hope the Chancellor will remember that if he is not able to help directly in these ways, perhaps he would extend the relief which I understand the Inland Revenue are already giving in certain cases by allowing one post-war credit to be set off against a claim. If this could be extended by allowing two or even three of these postwar

credits to be set off against the amount alleged to be due, that would help a great deal. I also hope he will tell us that he has also instructed the Inland Revenue to be very reasonable in answering questions and in meeting the doubts of taxpayers who say that the demands are not correct, and who are, by the very nature of things, unable to prove their case. I gladly support the new Clause.

Mr. Hale: This matter was raised on an Amendment in the name of the hon. and gallant Member for Holdemess (Lieut.-Commander Braithwaite) during the Committee stage. As the hon. and gallant Gentleman has said, it was abundantly apparent that there was a great deal of feeling about it by Members on both sides of the Committee who felt that if some machinery could be devised to give effect to the intention that machinery ought to be devised. I am sorry that the hon. and gallant Member for Holderness should have referred as he has done to my hon. Friend the Member for Sowerby (Mr. Houghton), who made a very useful intervention, from which the hon. and gallant Gentleman has greatly profited since he is prepared to leave out the objectionable part of the Amendment to which my hon. Friend drew attention.
The hon. Member for Sowerby therefore helped the hon. and gallant Gentleman, in addition to the millions whom he has helped in other ways, and he made it quite clear that he had a great deal of sympathy with the proposal, as did most of those hon. Members who spoke. My hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) then intervened, and my hon. and learned Friend the Member for Northampton (Mr. Paget) made one of those contributions which he frequently makes in this House which are of very real help to our discussions. He said "Why cannot we call it a day now? Why should soldiers still be called upon in connection with things that happened years ago? Why should they be called upon to pay back on accounts which they have forgotten, and which they have no means of checking?"
My hon. and learned Friend and I put our heads together and drafted a new Clause to put upon the Order Paper, although it escaped your notice, Mr. Deputy-Speaker. We did it in as clear


terms as we could in order to express the suggestion which my hon. and learned Friend made. Though he signed it, for some reason or other his name does not appear on the Order Paper. I would like to apologise for the fact that his name does not appear, because he is the parent of the Clause which I should have moved today if I had been allowed to do so.
I express my support for the proposals of the hon. and gallant Member for Holderness, and would like to put one particular point of view about this matter. I remember very well the historic day when I advanced to the table to draw my first Army pay. At that time, quite frankly, I had no knowledge whatever of the beneficent provision that the Government had made for me in that connection. I went to the table and pushed out my hand, and the paying officer put in 6s. He did not look at me before he did so or I could have understood it, but, apparently it was the rate for the job. Being interested in higher mathematics, I afterwards made inquiries as to how this computation had been arrived at. I was told that the actual rate of pay was 2s. a day and that they knocked off 1s. a week and put it to my credit in case I got into difficulty, or so that they could help me out if I yielded to some of those temptations which afflict a soldier when he strays from the camp. Then they said I had made a voluntary allotment of 7s. a week to my wife. So, apparently, years ago there was a man in the War Office with a sense of humour who invented the term "voluntary allotment" for a compulsory deduction. No one ever consulted me at all. There was also the technical problem that I was not allowed to go on leave very often, and the fact that my wife had often spent the money before I could borrow it back.
However, I want to put the serious point about the tax which the hon. Member for Blackpool (Mr. Low) mentioned. The hon. Member referred to the fact that tax was deducted at source, generally speaking, and that that was the obligation. They could not do it with me because it was years afterwards that they told me that although I made a voluntary—i.e. compulsory—allotment to my wife that was part of my pay, and that out of the 6s. they paid me I owed them 7s. for Income Tax, quite apart from any

question of Sur-tax. My pay was actually 14s., and with tax at 10s. in the £, I owed them 7s., although they had only paid me 6s. It sounds funny now, but it had its darker side.
I want to put quite seriously to the House one or two points on this matter. Nobody in the unit at that time knew what pay he was entitled to at all, and had no means of finding out. There were all sorts of Service increments, and increments one got for skill or proficiency, but no one knew what they were, not even the paying officer himself. People were given so much money; they hoped it was right and feared it was wrong.
My second point is that no noncommissioned officer or other rank would normally ask for his pay account. He had the horrible feeling that if he did he would find that he was £20 overdrawn. Those who did and defied the wrath to come usually found that they were overdrawn. Although the Army Pay Corps did a magnificent job, there was case upon case after Dunkirk where men who had never been to Dunkirk, and who could establish that fact, were charged with large sums of money. But there were those who could not establish that at all. During that period money was paid out on the train and receipts were often lost. To be told in 1949 that in 1944 one drew some money in Burma, or for a man to be told that some money was advanced to his wife on his behalf while he was in prison in Japan, and that he now owes tax, is a hardship we ought to remove.
I want to add one thing to what the hon. Member for Blackpool has said. It is all very well for the Minister to say that this means an anomaly. It means that John Jones who paid his tax the day before, is worse off than Bill Brown who did not pay his tax until the day after. That applies to every alteration that is made. When it is said that we are going to increase depreciation allowances to 40 per cent., it means that the man who got his machinery early and put it in, does not get it, whereas the man who ordered later does. It is inherent in any alteration of taxation procedure that there shall be an anomaly of some sort. One could realise quite clearly when we heard the Financial Secretary's reply the other evening that he, as indeed everybody in the Committee, shared the very considerable sympathy which


we all felt for this particular class of case, and also shared a desire, as I am sure my right hon. and learned Friend does, to try to stop not merely the money claim on the discharged soldier but the insuperable nuisance, and sense of indignation and frustration, that this claim causes him when he is asked to go back all this time and try to satisfy his mind on what is the position.
The Clause of the hon. and gallant Member for Holderness has a more narrow effect than mine because it limits the payment to £75, but as we are discussing the hon. and gallant Member's Clauses I will adopt it for my purpose. I urge my right hon. and learned Friend to do his utmost to give effect to the clear will of the House in this matter, and assure the House that something will be done to meet this legitimate grievance.

Mr. Jay: As the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) said, we had a lively Debate on this subject last week, and my right hon. Friend the Financial Secretary undertook to convey the feeling of the House to my right hon. and learned Friend the Chancellor of the Exchequer. That has been done, and my right hon. and learned Friend has considered this matter again.
The Clause before us is very similar to the Clause which was moved by the hon. and gallant Gentleman last week. I was asked then what would be the cost of granting this concession in that form. It is difficult to estimate, but we think it would he somewhere between £2 million and £3 million. I will not rehearse at any length the objections which the Financial Secretary and I advanced last week to the proposal in that form. They were briefly two: first, that if we were to cancel all arrears outstanding now, it might be held to be very unfair to all those who had paid in the years since the war, and that feelings might be so strong that repayments would have to be made, which would raise great practical difficulties. The second main objection was that if we went as far as that, we would be giving relief, as my hon. Friend the Member for Sowerby (Mr. Houghton) said, irrespective of need and also irrespective of ability to pay. Those objections to the course which the hon. and gallant Member is proposing seem to us insuperable.
On the other hand, as the hon. Member for North Blackpool (Mr. Low) said, there is more than one possible course which can be adopted. We have therefore considered, amongst other alternative proposals, the following possibility, that no further notifications of tax liability should be issued from today, although collection should continue in all those cases where notification has already been sent out. That would mean, in effect, shortening the period of statutory limitation during which assessments can be made from six years, at which it now stands, to four years. It need not involve us in the great difficulty of making repayments to those who have already paid.
Of course, objection can also be advanced to that alternative. It can be argued that those who have already paid will be dissatisfied if they see that no further notifications are being sent to others. It can also be argued that those who have already received their notifications, who have been assessed and will still have to pay, will also be dissatisfied; and the same would apply to those taxpayers who have been assessed in the past and who have agreed with the Inland Revenue to pay the tax due over a period which has not yet expired. But as was said, I think, both by the hon. and gallant Member for North Blackpool and by my hon. Friend the Member for Oldham (Mr. Hale), whatever we do in these cases, in curing one anomaly we are bound to some extent to create another.
9.0 p.m.
Taking that into account, and in view of the special case of these Service men's arrears and of the feeling which was expressed in the House last week, my right hon. and learned Friend has come to the conclusion, on the assumption that in that case this Clause would be withdrawn, that as from today no further notifications of tax liability shall be issued in respect of war-time service pay received up to April, 1947.

Captain Crookshank: Under what authority?

Mr. Jay: That can be done administratively by the Inland Revenue under the authority of the Chancellor, and I am advised that it does not require an alteration in the Bill. It will, of course, mean that those who have already received


notifications will still have to pay tax, and that those who are in the process of paying sums which they have agreed to pay over a period will also have to pay; but it will mean that no further notifications will be sent out and, therefore, in the words of my hon. and learned Friend the Member for Northampton (Mr. Paget), in that sense we shall "call it a day."

Captain Crookshank: I am sorry to hear that the Government are not going to the length proposed by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) in this Clause. As I understand the position, it is that from today no further notifications will be made and, therefore, as from today no one who has not yet received notification will be called upon to pay these arrears. I should like to know under what authority that is done, because if it can be done in this case, does it mean that the Chancellor has full right in the case of any taxpayer to say, "As from today you need not pay any more"? Is that the legal position? If that is the law I am very surprised. If it is not the law, how does the Chancellor propose to effect what at first sight appears to be some concession to the class about which we are speaking?

Sir S. Cripps: It is done by administrative action under my authority in exactly the same way as individual taxpayers who cannot pay, are dealt with, for instance. Under these provisions, where it has been ascertained that people are unable to bear this burden, they are, in fact, discharged without any particular legal authority under any Act of Parliament but by the Inland Revenue under my authority.

Mr. Harrison: About how many people, will be affected by the concession?

Captain Crookshank: No doubt the hon. Member for East Nottingham (Mr. Harrison) will be able to make his speech in a moment. I thought he was interrupting on the point with which I was dealing. I want to get this point cleared up, because the right hon. and learned Gentleman has now said that this is in the same category as that in which he uses: his authority in certain matters.

I know, of course, that there resides in the Chancellor certain authority in certain matters, but I understood him to say that this is the same authority as is invoked in the case of the taxpayer who cannot pay. But that is not the question at all; it is not necessarily the case that all these people cannot pay and we have not entirely based our argument upon that point.
With all due respect, I hope the right hon. and learned Gentleman may say something on this point. It seems to me that one has to be very careful in dealing with the tax law, and the administrative use of concessions is obviously one which must be very much limited. That is why we put down a Clause so that this could have proper statutory authority. As I understand it, if for some reason it is quite hopeless to get a person, a particular taxpayer to pay—and I am now taking the general case—because it is obvious that he cannot pay, then to the best of my recollection, there does reside in the Chancellor power to deal with that case; but it seems to me to be stretching that authority enormously to use it in this case.
I hope the House will not misunderstand me; I am supporting the plea that something should be done. What I am trying to do is simply to clear up the position. It seems to me that this is not a power which can be extended, to tell a whole class of people that they will not receive notifications. It would be possible, perhaps, if one were able to say that none of these people could afford to pay; but that would be a big stretch of the imagination, and I hope, therefore, if the right hon. and learned Gentleman wants to make a concession—and it appears from the speech of the Economic Secretary that he is prepared to help these people—he may do what I submit is the right thing, which is to put words into the Bill to make it possible.
We have altered this new Clause, which is a variation of a previous Clause which we discussed, because we thought we would limit the proposal to Service emoluments. We thought it would be possible, when the concession was made, to distinguish between Service emoluments in wartime and other sources of income. That is why we put it in this form. I press the Chancellor to reconsider this matter. The Economic


Secretary, by the administrative plan which he suggested, admitted there are bound to be some cases where possibly there would be a sense of unfairness on the part of those who have already paid. We also admit that in the terms of our Clause, although I am inclined to agree with some of my hon. Friends who have spoken in believing there would not be any grudge in the minds of most of the ex-Service men who, for some reason or another, have already paid at the fact of this concession, because the essence of the problem is the length of time that has elapsed and the hardship that arises out of that very fact.
The Economic Secretary said that it would be very difficult to say how much this would amount to. He put it somewhere between £2 and £3 million. If all the outstanding claims were as much as £75, which is very unlikely but which is the figure we put in this new Clause, that would represent somewhere about 30,000 cases, but I do not believe they would be anything as high as £75, and the estimate will cover a far larger number of men, if, in fact, £2 or £3 million is the right figure. The sum of £2 million is not very much to concede in this particular field, taking into account the vast amount collected in Income Tax and is a very minute proportion of the whole of the Budget. It would be a very useful concession if, even now, the right hon. and learned Gentleman would say that, having made an attempt to deal with it administratively—and I hope for a further explanation on that point—in view of the general opinion of the House, it would be better to adopt our proposal.
At the end of the Finance Bill we are always in a difficulty. This is the last stage. No one else can touch the Finance Bill when we have finished with it, and, of course, it is a rather difficult point of procedure at this stage for the Government to put down a new Clause, but if they can secure a better proposal than ours, it may be that a manuscript Amendment would be accepted or it might be possible, somehow or other, for a further Clause to be proposed. I ask most specifically how the proposal of the Economic Secretary can legally and lawfully be carried out. To take administrative action in such a scheme as this is, in point of fact, the question at issue, and is not necessarily the way to meet these particular cases after such a long delay. In

our Clause a way is left open to anyone who so desires to meet an Income Tax demand for those years during the war, particularly if circumstances have since improved. For instance, the conditions of the hon. Member for Oldham (Mr. Hale) are better than they were formerly.

Mr. Hale: Not much.

Captain Crookshank: I can think of one or two ways in which the hon. Gentleman is better off, and if he were sent a bill for £4 2s. 6d. for 1944 Income Tax arrears, I think he would find it in his heart to make an ex gratia payment to meet the account. I would not put him to the difficulty of answering that conundrum today. I can imagine it might be possible for a man or woman concerned to be anxious and willing to pay. On the other hand, there are obviously thousands of cases, on the figures given, amounting to perhaps 20,000, 30,000 or 40,000, which may be very difficult. In view of the generally expressed opinion, I hope that the House will not be satisfied with the administrative arrangements, but will try even now to persuade the Chancellor to go a little further our way.

Sir S. Cripps: I should like to reply to the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank). What we have offered to do, if the proposed new Clause is withdrawn, is to try to deal with it by administrative measures. That is a perfectly proper and competent thing for us to do. There are provisions under which hardship cases, whether individual or group, can be dealt with by the Chancellor of the Exchequer and the Inland Revenue. After all, this is a case which it is alleged to be one of a type of mass hardship that ought not to be dealt with in the way proposed but can be dealt with perfectly well under the hardship provisions. There is nothing irregular in that proposal. Administratively, much bigger things than this have been dealt with.
As the House will remember, for four years excess payments of P.A.Y.E. were dispensed with completely, without any legislation of that act. It is true that we did legalise it last year, in its fifth year, but we had covered for four years the entire range of P.A.Y.E. This is not a matter of that kind. If we do as we have said we are prepared to do if the proposed new Clause is withdrawn, and take administrative action to see that no notifi


cation is sent out after today, we shall have gone quite a long way to meet the universal view of the House. I hope the House will accept our offer.

Mr. Paget: I would like to express my gratitude to the Chancellor of the Exchequer and to the Financial Secretary for the proposal they have made. It is a just proposal. Most of these claims arise from mistakes made by Government officials or officials in the Pay Corps. There may even be a further mistake, but by this time it is impossible to check up on that mistake. Since this matter was raised—I am sure we are all very grateful to the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) for having raised it on the Committee stage—I have met more than one instance in which a claim of this sort was put forward. One man was in a position to employ accountants to investigate a claim. The Pay Corps turned out to be wrong again, and there was money owing by them to the man. Small people are not in a position to make an investigation. Therefore, apart from anything else, such claims are extremely unjust.
I should have thought there was a little substance in what was said by the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank), that where we are dealing with a class, it may be more convenient to put the provision into the Bill, although it may not be legally necessary. Without any disparagement, I do not very much like the drafting of the Clause. It does not seem to me quite to express the concession, but the Clause in the name of my hon. Friend the Member for Oldham (Mr. Hale)—[Liability for income tax on pay received for service in His Majesty's Forces before 14th August, 1945]—seems to express precisely the concession which the Financial Secretary has made. It puts into quite suitable drafting exactly what he has said. That Clause has not been called, but I should have thought that it was within the Rules of the House if the House and the Government desired it, for the Chair to change its mind about the Clause. It seems to do precisely what the Government want to do, and I should have thought that it would be convenient to have it in the Bill.
9.15 p.m.
As to administrative concessions, I rather hope that some administrative concession may be made in cases where notice has been given and where the man has not been able to pay in full but the payments have, through P.A.Y.E., been spread over a number of years, so that over a number of years these back assessments, which perhaps came up for the first time in 1948, have gradually to be paid off. I do not see how a general rule can be made regarding that, but I very much hope that the Treasury will have another look at old claims coming forward years after the war which are being paid off gradually by instalments, and see if those instalments can also come to an end. In many cases that would be a just thing to do. The estimate of £2 million or £3 million was, I believe, based on the form of the Clause moved by the hon. and gallant Gentleman the Member for Holderness (Lieut.-Commander Braithwaite) on the Committee stage. I believe that that Clause was not confined to Service emoluments. Confining it to Service emoluments, even if we take in the instalment payments, I am quite sure that it will come to much less than £2 million or £3 million. If the Treasury are thinking in terms of £2 million or £3 million, I hope that by executive action they will look at the instalment cases.
When one served one's country as these men did—served it in difficult conditions and often in Japanese prisoner-of-war camps—it does not seem very grateful on the part of the State, years afterwards, to be extracting payment every week in respect of the service which was given. The time has come to look at these instalments.

Mr. Mott-Raddyffe: I hope that the Chancellor of the Exchequer will think again and be a little less ungenerous in his attitude. He has certainly made a concession, but it is rather a niggardly one, and he has not really dealt with the main problem. What he has proposed will certainly disappoint hon. Members in all parts of the House who have supported the Clause moved by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braith-waite). It is not a question of whether or not one individual can or cannot pay the arrears of tax which are alleged to


be due. The question is that in many cases it is anybody's guess whether the Inland Revenue is right or whether the individual is right, and there are cases where it is absolutely impossible to prove who is correct.
I will cite one obvious example to the right hon. and learned Gentleman. I am sure my hon. Friend the Member for North Blackpool (Mr. Low) will bear me out when I say that those of us who served in Greece are in this difficulty. Almost all the Army pay records were sunk during the evacuation, so there is no physical means of proving whether the assessment is correct. I will certainly disclose a personal interest in this, because I am in the same boat, in the financial sense, as the hon. Member for North Blackpool in that I also recently received a demand for arrears of tax going back to 1939. I sent the demand to the Financial Secretary, hoping it might melt his heart. I have not the foggiest idea of how the alleged underassessment arose, and there is no possible means of proving whether the right hon. Gentleman is right or whether I am right. That is the main burden of the argument which has been put forward by the hon. Member for Oldham (Mr. Hale) and by other hon. Members on all sides of the House.
I suggest that the individual member of His Majesty's Forces is entitled to expect, when he is serving his country overseas in wartime, that, so far as is humanly possible, the Inland Revenue should deduct the right amount from his pay at source. I agree that in certain circumstances it may not be easy for the Inland Revenue to make the right assessment—it takes some time to get the pay sheets from overseas stations; there is the difference between temporary and substantive rank—but at least it is possible for the Inland Revenue to make the correct assessment, whereas for the individual member of His Majesty's Forces, being continually shifted from one war theatre to another, it is physically impossible.
Moreover, I suggest to the right hon. and learned Gentleman that, when a member of His Majesty's Forces who has been demobilised in 1945—and this was the point made by the hon. Member for Oldham with much eloquence—thinking he is all square so far as the Army pay office is concerned, gets married, raises

a family, is in a new job and if he is lucky, installs himself in a house, and then finds arrears of tax served on him going back to 1939, it really is an intolerable position. That, in our view, is an injustice which has nothing whatever to do with whether that individual is earning four, three or two figures. It is an injustice which ought not to be allowed to continue, and for that reason I beg the Chancellor to think again.

Mr. Emrys Hughes: For the last half hour we have been listening to a great deal of special pleading by one trade union. I would like to know if the special concessions which are to be given to members of the Forces are to be given to miners, because I know of miners who have received similar demands. There has been an attempt to introduce into the Debate a false note of sentimentality in order to get a financial concession.
After all, the docker who has risked his life handling a cargo of explosives is just as much entitled to special consideration as an officer who might or might not have been in a Japanese prison camp; the miner who did not have an opportunity of going into His Majesty's Forces did as much during the war in his own way, and risked his life just as much, as a member of His Majesty's Forces. If this concession had been asked for all prisoners of war it could have been understood, but the argument that this applies only to prisoners of war captured in Burma, who spent their time in Japanese prison camps, is quite misleading. Surely the £2 million-£3 million applies not only to ex-prisoners of war but to others who are quite as well able to pay as the old age pensioner who has been a miner or a docker, or who has served his country in another way.

Mr. Paget: A miner, surely, would have been paying his tax by P.A.Y.E.

Mr. Emrys Hughes: I have had at least two cases of miners who are suffering from the same kind of grievance as has been expressed in this Debate.

Mr. Mott-Radclyffe: On a point of Order. Without in any way wishing to prejudice the case of the miner, is there anything in the Clause, Mr. Deputy-Speaker, which refers to arrears of payments for miners?

Mr. Deputy-Speaker (Major Milner): No, but we are discussing the Second Reading of the Clause which appears on the Order Paper. I think it is competent, therefore, for hon. Members to argue on the lines followed by the hon. Member for South Ayrshire (Mr. Emrys Hughes), but not, of course, to make a proposal on the lines that other members of the community not included in the Clause should be so included.

Mr. Emrys Hughes: The hon. Member should follow the motto:
Render to Caesar the things that are Caesar's, and to Cripps the things that are Cripps's.
I fail to see why the brigadier should be in a specially privileged position as against the butcher.

Mr. D. Marshall: I had hoped to take part in the Debate on the Committee stage but, unfortunately, I had a severe cut on the head, and, therefore, was absent for a few days. I feel that the Chancellor has been rather rough over the Clause. The reason why I think so is that when the Economic Secretary mentioned that the cost to the Treasury, if the Clause were accepted, would be between £2 and £3 million or thereabouts, the House immediately realised the extra burden which might have to be borne. But that is not the point, because if these tax mistakes have been made over the years to that extent, it is reasonable to suppose that, equally, a like, and probably very larger, amount was actually overpaid to the Treasury during the same period. On the equation of that balance there is no reason to believe one way or the other that there would be a loss to the Exchequer—it might well be the reverse.
I cannot agree with what the hon. Member for South Ayrshire (Mr. Emrys Hughes) has just said. The Clause concerns men who have been abroad with no possibility of knowing whether the tax they have had deducted was right or wrong, and who are suddenly burdened with a demand for payment. The Chancellor now says that he will send out no further notifications. Unlike my hon. Friend the Member for Blackpool (Mr. Low), who thereby does not benefit from it, I might say that I do benefit, because so far I have not received a notification. That, however, is not the point.
The Chancellor, apart from not agreeing to wipe out this tax altogether, has not even gone so far as to say that he will take one, two or three post-war credits into consideration. That is a point which he might at least consider. One hopes for a concession and even if that concession is small one cannot consider it as nothing at all. I consider, as I said in my opening remarks, that we have had rough treatment over this matter, and I do not like it.

Mr. Frederic Harris: Just over a week ago feeling in the 'House about this matter was very strong indeed, and it is no less so tonight. This position is a very unfortunate one, and I do not think there is any hon. Member who has not experienced trouble from his constituents. We are constantly being approached on this serious issue. Tonight, we have heard a reference to the cost of £2 or £3 million. Considering that the Government have said that they themselves did not have time even to consult local authorities about dog licences, how did they manage to find out that the cost of accepting the Clause would amount to £2 or £3 million? I suggest that it is sheer guesswork, and is put out by the Government accordingly.
On Monday night a captain came to see me in my constituency. A few days ago he had a demand from the inspector of taxes for £75, outstanding from October, 1945. That was the first intimation he had of any kind whatever. The letter from the inspector was couched in very fair language, but the captain had not £75 with which to pay. It is absolutely intolerable that people should be receiving demands four or five years late. If they were individuals, people or business firms, submitting bills four or five years late, do hon. Members think that those who received them would say, "We shall be only too willing to pay"? This applies also to other Government Departments.

9.30 p.m.

Sir S. Cripps: The ordinary person has seven years in which he can present a bill.

Mr. Harris: I quite agree that he has seven years, but do hon. Members think that if businesses rendered a bill four or five years late, they would seriously expect to get the money? What about


the money owed by the Revenue? They are not very quick to pay it back, but they are quick in making demands. I suggest that these issues are far too serious to be set aside, as they have been tonight. Reference has been made to this as a concession. I do not call it a concession at all. If the Revenue are so incompetent as not to have rendered bills up to now to certain people, surely it is not a concession to be so kind four or five years later as not to render accounts to those people.
In the letter which the inspector sent to the captain I have mentioned, he openly admitted that an error had been made by the paymaster. I have sent the papers to the Financial Secretary because I am sure he will view the case in a generous spirit, and decide what is to happen. The Revenue have to draw a line somewhere. The Revenue comes forward with demands when people have not the money to pay. Individuals or businesses could not get away with it. It is time the Government realised that they should draw the line here, and call it a day.

Mr. Houghton: If hon. Members go on talking like this they will imperil this concession [HON. MEMBERS: "Why?"] If hon. Members will be quiet a moment I will tell them why. The Chancellor has made a very courageous decision. He has taken a decision to remit arrears of tax for a very large number of ex-Service people without any regard to their willingness or ability to pay. He is going to remit that tax on the grounds of hardship, which is a very wide extension of the term. If hon. Members opposite press the Chancellor further, as they are doing, first to cancel the demands which have already been issued; second, to cancel the arrangements which have already been made between taxpayers and the Inland Revenue to pay off the arrears; and, third, to repay the money which taxpayers have already paid off arrears they will put him into an impossible position.
The Chancellor, by deciding to wipe the slate clean for those who receive demands after today, has, in my submission, gone as far as he can without jeopardising the whole principle of taxation and the obligation of equity as between one taxpayer and another. The hon. Member for South Ayrshire (Mr. Emrys Hughes) is quite right when he

said that ex-soldiers are not the only ones receiving demands for arrears of tax. There are workers, old age pensioners who gave up work several years ago, and, in some cases, widows; I have had them come to me by the score within recent months. They all plead that owing to difficulty and delay in checking up their tax affairs while they were at work, or the tax on the previous earnings of deceased husbands, demands are only now being issued for those arrears to be paid. How can my right hon. and learned Friend justify exacting the last penny from widows and old age pensioners while he remits, on the grounds of hardship, arrears of tax due from brigadiers and major-generals? That is the issue—

Mr. Speaker: I am sorry to interrupt the hon. Member, but I think he is getting a little wide of the Motion. I believe it might have been as well to hear the mover of the Motion to see what he was proposing to do. That might have shortened the proceedings a good deal.

Mr. Houghton: I was about to conclude, Mr. Speaker, by giving hon. Gentlemen opposite a word of advice. The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) referred to me in facetious terms. I shall always hinder hon. Gentlemen opposite from exploiting public sentiment in favour of ex-Service men and disregarding other members of the community. If the concession of the Chancellor is not acceptable to them, then in my humble submission he would do well to withdraw it.

Colonel Dower: I do not intend to make a long speech, but I shall pass more than a few remarks. The hon. Member for Sowerby (Mr. Houghton), who grossly exaggerated the problem before us, referred to brigadiers and major-generals. What he said was absolute nonsense. I can assure the hon. Member that a great many officers who served in the war belonged to the humble ranks, such as second lieutenants, and were not particularly well off. I can assure him that the question of back taxation affects them very seriously. I would not have adopted that line had it not been for the speech of the hon. Member. I appreciate the concession the Chancellor has made, on a day when he has had many grave and important things to consider.
At the same time, when the Chancellor says that the claims already made will be the subject of discretion, I would ask who is to exercise that discretion? [HON. MEMBERS: "He did not say that."] In answer to a Question I put in the House on this very problem, it was said that these demands would not be pressed in cases of grave hardship. I have been told that these cases will be carefully examined, and that means exercising discretion. I am asking the Chancellor to see that the officers of the Inland Revenue who have to consider these claims will be able to exercise their discretion. I think it would be grossly unfair if any kind of regulation were made which would be applied automatically. Indeed, I do not know how he would carry out such a provision. However, I appreciate the concession. I should like the Chancellor to concentrate on choosing officers of the Inland Revenue who are capable of judging individual cases.

Lieut.-Commander Braithwaite: A short time ago, when hon. Members were good enough to indicate that they were prepared to hear me again, I intended to address myself to the advice of the right hon. and learned Gentleman. We are all prepared to accept the advice of the hon. Member for Sowerby (Mr. Houghton) on Income Tax matters, but not on Parliamentary procedure or tactics. I say at once that half a loaf is better than no bread. I should like to thank hon. Members in all parts of the House for the support which they have given to this proposition and, even more, for the manner in which they have asserted themselves over the Executive, not only last Wednesday morning but again tonight.
I understand from the Chancellor that his proposition is to deal with this position administratively under the hardship provisions. If that is the case, I urge upon the right hon. and learned Gentleman that if he intends to exert his own authority in this matter he might well extend it to claims which are still in dispute, which have not been settled, and, indeed, to unpaid instalments on the lines suggested by the hon. and learned Member for Northampton (Mr. Paget). I believe that the effect of this will be to let off those who have done the shortest service in the Forces, because those who

went in earlier have probably paid their claims and had them settled.
There is a parable on this subject. Frequently, those who bear the heat and burden of the day come off worse than those who join in at the eleventh hour. It is better that something rather than nothing at all, should be done. I still think that it would be better if the right hon. and learned Gentleman were to insert a new Clause in the Bill. I should think it would be possible, if we rise tonight before consideration of the new Clauses has been completed, to put down a new Clause. I leave that to him. In view of the fact that we have got half a loaf, which is better than nothing, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(AMENDMENT AS TO DOUBLE TAXATION RELIEF.)

In paragraph (a) of subsection (2) of section fifty-two of the Finance (No. 2) Act, 1945, after the words "dividend shall," there shall be inserted the words "except in the case of a dividend on a preferred share at a fixed gross rate per cent."—[Mr. Selwyn Lloyd.]

Brought up, and read the First time.

Mr. Selwyn Lloyd: I beg to move, "That the Clause be read a Second time."
I cannot pretend that this subject will have the same popular interest as the new Clause which we have just finished discussing. Nevertheless, it concerns a hardship to a small number of people, and I hope that the Government will consider the matter very seriously. It relates to deductions of tax from the dividends upon preferred shares in companies which are subject to double taxation relief. Before the Act of 1945, the dividend on a preferred share would be paid less the net United Kingdom rate of tax, so that if the full standard rate was 9s. in the £ and the relief was 4s. 6d. in the £. the dividend would be paid less 4s. 6d. in the £. The 1945 Act made it obligatory upon companies to deduct the full standard rate in such cases, but it also contained a provision that in the case of persons entitled to claim repayment of tax, their claim would be limited to the net United Kingdom rate. Therefore, the tax would be deducted at the standard rate of 9s. in the £.
9.45 p.m.
In my example, if relief were given at 4s. 6d. in the £, the person entitled to the repayment of tax would only be entitled to claim it at the rate of 4s. 6d. in the £. Suppose we had a person of very small means whose sole source of income might be the dividend of £100 on preference shares in some company which was subject to double taxation relief. That £100 would be paid less 9s. in the £—in other words, less £45—but when that person came to claim the repayment which he was entitled to claim, he would be able to claim only £22 10s. That appears to me to show a complete lack of justice, and it affects people entitled to a repayment of tax who are a very poor section of the community and who would suffer this substantial injustice. Those who apparently benefit from that state of affairs are not the Exchequer but the ordinary shareholders of the company, because they are the people into whose general funds goes the extra 4s. 6d. which the company has been able to deduct.
It seems to me that it should not be beyond the wit of the Government, the Treasury or the right hon. and learned Gentleman, to remedy what is a very small anomaly but one which causes a real injustice to people least able to bear it. The matter has been raised before, but has been usually met with a sterile answer. The Chancellor gave an indication, during the discussion on the last new Clause, that a way might be found round this problem, and, because it seems to me that these people will be subject to a great deal of hardship, just as was the case with the people whom we have just been discussing, I hope the Government will not defend themselves behind the legality of this position, but will either accept the new Clause or indicate that they will remedy what is a serious injustice to a small selected class.

Mr. Eccles: I beg to second the Motion.
My hon. and learned Friend who moved the new Clause with exemplary lucidity has put the point perfectly. It covers a small but none the less definite injustice.

The Solicitor-General: I have on at least one previous occasion heard the hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who moved the new

Clause, propound the argument which he thought right to put forward in support of it. I am afraid I can only give him in reply the answer which I have given him before. I hope I may vie with him in the brevity and lucidity with which he put forward his case. I will endeavour to do so.
It seems to me that the hon. and learned Gentleman is up against a clear dilemma from which there is no escape. If the Revenue pays to the preference shareholders relief at the full standard rate of tax, it means that the Revenue will be paying to the shareholders money which the Revenue has never received, and will be taking out of its pocket tax which it has never received. Therefore, 'that is an impossible way of dealing with the matter, and I am quite sure that the hon. and learned Gentleman would not expect that solution to be adopted.
The only alternative method is the method adopted for the purposes of Dominion Income Tax under Section 27 of the Finance Act, 1920. That method, which is the only alternative way so far as we view the matter, is also open to equally serious objection. The system that was embodied in that Section of the Act had the result that it was the ordinary shareholder who paid the preference shareholder the amount of the foreign tax, which is equally impossible. There is no reason why any preference shareholder should be repaid the amount of foreign tax on his dividends at the expense of the ordinary shareholder. That would simply mean that the preference shareholder is getting an uncovenanted benefit, because this is what happened when the Dominion Income Tax plan was in operation. Under that plan, the company simply deducted the net United Kingdom rate, Therefore, the difference between the net and the full standard rate had to come from somewhere. It had been paid; the company had paid it, and it did not get it back by deduction from its shareholders when it paid its dividend.
What was the result of that? It simply meant that the difference between the net United Kingdom rate and the standard rate came out of the general pool of profits available to pay the ordinary shareholders after the preference shareholders had received their fixed dividend. That is equally impossible. If the former plan is adopted, the Revenue is called


upon to pay money it never received, and if the latter is adopted, the preference shareholder is getting an uncovenanted benefit at the expense of the ordinary shareholder, and that is grossly unfair to the ordinary shareholder.
The only practical way of dealing with the matter is for the preference shareholder to get his relief at the net United Kingdom rate, and that is the plan we have adopted. After all, if the preference shareholder wants to dispose of his shares—he being a person whose income is so low that he is liable to relief by repayment—he can dispose of his shares and invest the money in other securities which are not affected by the double taxation relief.

Mr. C. Williams: As the Solicitor-General indicated, he has made that speech once or twice before, and each time I hear it I am less and less convinced that there is any case whatever to be made out against my hon. and learned Friend's new Clause. When at the end of his speech the right hon. and learned Gentleman said that if the shareholder were dissatisfied he should sell his shares, it really seemed to me to be a remark which I had never heard before from the Treasury Bench. I have never heard it said before, in answer to a question about an unfair method of taxation, that if the shareholder is aggrieved, the best thing to do is for him to sell his shares. I think that is a thing which ought to be noted. If a shareholder did that, heaven only knows what he would do with the money he received. Never before from the Government Front Bench, from the Solicitor-General or from the Financial Secretary have I heard such an argument when a financial grievance was being discussed.
It is certainly a great pity that between the Committee stage of the Bill and this stage something was not thought out by the Treasury to alleviate a grievance which, though possibly not a very big one, is to my mind and to the minds of a considerable number of people who have listened to the arguments put forward tonight, one which is doing an injustice as between the preference and the ordinary shareholder.

Mr. Assheton: My hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) put the case for this Clause

extremely well, and made it clear to the House that it could only affect people with very small incomes indeed; but it is a hardship, and nothing which the Solicitor-General said convinced me to the contrary. He played a very good game of skittles; he put up two alternative methods of dealing with this hardship, and said that it was quite impossible to adopt either of them. That is a very good trick of Debate, but it does not satisfy the House, and I suggest that this new Clause is very sound.

Question put, and negatived.

New Clause.—(AMENDMENT OF S. 27 OF INCOME TAX ACT, 1945.)

At end of subsection (2) of section twenty-seven of the Income Tax Act, 1945, insert—
Provided that where the undertaking consists mainly in the mining of tin, tungsten or lead, the person carrying on the trade or business may elect that in lieu of the annual allowance computed as aforesaid there shall be made to him a percentage depletion allowance, that is to say, an allowance calculated on the realised value during the basis period of the year of assessment of the extracted mineral products at the site where they are extracted. The percentage to be applied shall be at the rate of twenty-five per cent. of such realised value.—[Mr. D. Marshall.]

Brought up, and read the First time.

Mr. D. Marshall: I beg to move, "That the Clause be read a Second time."
This Clause is primarily concerned with mining in the United Kingdom. Although it applies to mining generally, the Financial Secretary can assume that my hon. and gallant Friend the Member for Camborne (Commander Agnew) and I have at heart the interests of the Cornish tin miners in particular. The Financial Secretary is fully aware that in countries such as Canada and the United States, as well as others, there are depletion allowances for metal mining. Anybody at the present moment who commences to win one of these metals is faced with very great difficulties. I think the Chancellor would be the first to recognise that fact. At the present time we are faced with heavy taxation, and with a wasting asset such as one has in mining, there is no proper relief by way of taxation relief of that wasting asset; therefore, a great deal of the incentive of the adventure is taken out of mining.
It is with the object of remedying that situation that my hon. and gallant Friend and I have tabled this Clause. We realise that even if the Government do accept it, it will be only a small measure of relief, but it will at least be some measure of relief. We feel that such relief would provide a certain amount of incentive to those people who may venture forth to develop our mining capacity in this country.
We heard a very grave statement this afternoon by the Chancellor of the Exchequer, and I think every hon. Member would agree that everything should be done to help solve our difficulties of the dollar gap. Even by putting forward a new Clause, which, although small, may promote a healthy inclination to get more metals from the ground in our own country, may well help to bridge the gap. My hon. and gallant Friend and I are not wedded to the words of this new Clause at all, but we are wedded to the principle which lies behind them. If the Chancellor should say that he agrees with that principle and will find a more suitable form of words, we should be the first to agree.

10.0 p.m.

Commander Agnew: I beg to second the Motion.
Section 27 of the Income Tax Act, 1945, provides for a system of annual allowances. The annual allowance is based on the working of a rather complicated formula under which a fraction is computed; it is made up, in its numerator, of the output of the mine for the basic period, and, in the denominator, the figure representing that same output which has to be added to the total future potential output of the mine.
We have been very largely prompted to put down this Clause by the fact that in many kinds of extracting industries, and noticeably so in the case of tin, tungsten and lead, it is extremely difficult, if not impossible, to forecast with any accuracy at all what the total future potential output of the mine can be. It is felt, in view of that, that the existing system of annual allowances will tend to be quite inadequate in the amount of tax relief it will grant.
The Clause substitutes, at the option of the mining company, in the case only of tin, tungsten and lead mines, a new

system under which a direct depletion allowance is given. This is based on an allowance at the rate of 25 per cent. of the actual output of the mine during any basic period. As tax relief, this amount, though more substantial than that given by Section 27 of the Act, is estimated to furnish only a very modest amount of relief—and one that is not likely to cost the Chancellor very much if this Clause is inserted in the Bill.
It is no coincidence that this Clause has been seconded by an hon. Member in whose Division there is metalliferous mining—one of the Cornish Divisions. We feel that at a time such as the present, when never was there a greater need to exploit to the full the resources which lie in our soil and beneath it, the Chancellor, in giving a stimulus to the exploiting of every source of our home wealth, will be assisting not only his Budget in future years by the increased yield of taxation which will be brought in, but will also be assisting in the solution of the economic crisis which was explained to us today.

The Solicitor-General: When we were discussing the question of depreciation allowances in respect of mineral rights during the Committee stage of this Bill we discussed the question as to whether, in principle, any such allowances should be given in respect of mineral deposits in this country. I submitted an argument to the Committee that, upon general principle, such an allowance could not be accorded. The reasons that I gave are, I hope, fresh in the minds of hon. Members, and I feel sure they will be fresh in the mind of the hon. Member for Chippenham (Mr. Eccles) who, I know, feels strongly on this point.
This Clause would cover mineral deposits in this country and, even if it were acceptable for other reasons, in my submission to the House it would be open to the general objection which I urged against granting any form of depreciation or other similar allowance in respect of mineral deposits in this country. Quite apart from these general considerations, however, I would urge upon the House that there are other and really quite fatal objections to the Clause. The Income Tax Act of 1945 is the code in our tax legislative system which outlines depreciation allowances. There are some Sections, I know, in the previous Act of


1944, but, broadly speaking, the Income Tax Act, 1945, contains the framework of our depreciation allowance system. The basis of the principle of grants for depreciation is that they are allowances against expenditure incurred. Whether we are talking about plant or machinery, industrial buildings or a type of expenditure which is envisaged under Part III of the Act, the allowance is only granted against expenditure actually incurred.
Depletion allowances, which are deducted in some other countries like the United States, are based upon a wholly different principle. They are not related at all to expenditure incurred, but to the quantum extracted from the mineral deposit. If this Clause were adopted, it would simply mean tax relief to the extent of 25 per cent. of the gross income accruing from the gross extracts. These are two contrasting and different systems. We have adopted the former system under which depletion allowances are given in respect of expenditure.
What the Clause seeks to secure is that, in respect of these particular deposits, the system adopted in other countries shall operate. In this country we are acting on the advice of our experts, who feel that the system which we have adopted is preferable. It is designed to assist industrialists in meeting expenditure which they have to shoulder for the purposes of their enterprise. Our system links relief to actual expenditure. Of course, one can at the outset adopt the alternative system if one thinks it preferable, but in 1945 the then Chancellor of the Exchequer worked out that this system should be the one to apply in this country.
I would urge upon the House that the system that we apply is preferable to the American one; but there is no reason whatever for combining both. The depletion allowance completely departs from the principle which we have adopted for the purposes of our legislative system. If our system is inadequate, then the appropriate method is to increase the amount of the allowance given. Our system works very effectively and efficiently. But what is desired in the new Clause is to depart from it. As I said, if it is inadequate, one should increase the amount of the allowances given, and attempts to do so are made from time to time. We have hitherto resisted them to a certain extent, but recently we made a very substantial

increase by doubling the 20 per cent. allowance for plant and machinery to 40 per cent. That is the way to tackle the problem if there is still a problem at all.
I submit to the House that it is illogical and undesirable, when there is a system which works well, to depart from it and seek to introduce something which runs entirely counter to the principle on which it is founded. For that reason, I say that no case has been made out for this departure from the principle of depreciation allowances which we are operating in this country.

Commander Agnew: I do not think the Solicitor-General has answered the point with regard to the unsatisfactory nature of the existing system, in that it is not possible to estimate what the total potential future output of a tin mine is going to be.

The Solicitor-General: I am sorry if I did not deal with that point. The hon. and gallant Gentleman certainly made it. What the Act requires is that an estimate has to be made of the total potential future output as at the end of the period which is being considered. Throughout the Income Tax legislation, estimates of unknown quantities have to be made, and they are as difficult to ascertain as in this particular case. Not only in Income Tax legislation, but throughout legislation, generally, one has constantly to make estimates as to output and so on. After all, it is for the Crown to tax the subject and to establish what the real estimate is. If it is doubtful what the estimate is, the Crown only gets tax upon what can be said to be the real estimate of what is still to be extracted from the source in question.

Sir Ian Fraser: I venture to speak for a few moments as a director of a tin smelting firm. I am very much aware of the extraordinary value to this country of even a few tons of tin, if it can be mined here. We get our tin from Malaya and Nigeria, which is sterling tin. In so far as we take that tin we are reducing the amount that can be sold for dollars in the United States. Alternatively, we get tin ore from Bolivia, and that has to be paid for in dollars. Our works are situated at Bristol. When they were founded 150 years ago, they were based upon the presence of tin in Cornwall and of coal in South Wales.


That is why it was situated in Bristol. The output of Cornish tin has been very much reduced, and we have had to go very much further afield. The dollar situation has restricted our operations, and it must become worse.
I must declare, therefore, my special interest in this matter, but it is the country's interest, too. Every ton of tin we can find and treat in England is not only capable of giving employment, but helps to keep alive the fine skill and knowledge which contributes towards all that is best in the industry so that it can make a direct and an immediate contribution towards the saving of dollars. The Solicitor-General has said that the English system is different from what is used in other countries, where there are many mines, particularly metal mines. He says that it would not suit our system to graft that system upon it, but mining is a very different operation from almost every other. It is most speculative, and that is the reason why, in other countries where mining interests are substantial, other methods of taxation have been adopted making allowances for the hazards and unknown factors.
There is still tin in Cornwall, but it is hard and expensive to get. It may be that the statement made by the Chancellor of the Exchequer foreshadows that we are to return to the austere conditions of the war, during which it was worthwhile to contribute specially to the production of Cornish tin. If this modest proposal gives any encouragement to any entrepreneur to risk his money in getting Cornish tin, it will be doing a good service to the country. I hope the House will look with favour upon the proposal.

10.15 p.m.

Mr. Eccles: I am sorry to differ from my hon. Friends in principle. I am with them in their objective, which is to give the mining industry of this country fair taxation allowances. On the other hand, I agree with the Solicitor-General that the principle of the depletion allowances is not as satisfactory as that which permits a mine to write off all forms of capital expenditure that have gone to the winning of the minerals. It is true that in the United States they have an allowance of 15 per cent. on the gross income. If the mine is successful, that might be very much more than any sums laid out in capital expenditure. Canada has an allowance of 33⅓

per cent. of the net profits not subject to tax, and there is also a very sensible provision called the "Three-year run-in provision" whereby for the first three years of the productive life of the mine it is not subject to tax. Similar provisions exist in South Africa and Malaya.
It is very untidy to give allowances through this system of depletion, with percentages based on the output of a mine, whatever that output may be. The Solicitor-General was a little unfortunate when he said that he preferred our method, because our method is not satisfactory. What we have argued time and time again is that if we are not to have the depletion allowance as in this Clause, we must have an allowance in respect of all capital expenditure incurred on winning the mineral. That is not so today. In that respect the mines winning these three metals in Cornwall and elsewhere certainly have a case in justice. The present law does not allow them to recover the expenditure on certain land which they must buy and on certain buildings which they must erect, all of which are intimately associated with the mine and, when the ore is worked out, become more or less valueless. If they have any value, and are sold, there is the balancing charge which takes care of the final sale price.
Therefore, while I cannot support the Clause because I believe the principle to be wrong, I also think that the Government are wrong in not giving allowances in respect of the capital expenditure over the whole field. I hope very much that next year we may have a comprehensive code of taxation upon mines which brings into the purview of the allowances all those expenses incurred in opening and developing a mine. I say this because if we do not do that we shall certainly handicap the Cornish mines and any other mines overseas which do not have this advantage.
In agriculture, which is an extractive industry, the taxpayer puts his hand in his pocket and gives the farmer very large sums of money so that production may be at a high level, which is in the national interest. Here is another extractive industry, which is asking not for a subsidy but for the right to get back over the life of the mine the capital expenditure put into the mine, if it earns profits sufficient to become subject to the


allowances necessary to get the capital expenditure back. That is not unreasonable if we desire, as I am sure we all do, to raise the production in this country of things which we would otherwise have to import. I do not believe that my hon. Friends want anything in the nature of a subsidy. They are asking for fair taxation, and we have not got that in the mining industry today. I hope that when the next Budget is introduced we shall find in the subsequent Finance Bill a Clause to tidy up this unsatisfactory position.

Mr. C. Williams: I congratulate my hon. Friend the Member for Chippenham (Mr. Eccles) on having put so clearly the grossly unfair position in which those who wish to develop mines in this country are placed in comparison with those who wish to develop mines in Canada. That, added to the way in which my hon. and gallant Friend proposed the Clause, and the immense ingenuity and great amount of work put into this Clause in order to get something on the Order Paper so that we could discuss the matter here, has brought out one point extremely clearly, namely, that we have in this country a certain amount of tin, copper, lead and other metals which have been much worked in the past and, in consequence, are now extremely deep and difficult to work. That is one side of the picture; on the other side, we are extremely short of money with which to buy raw materials of any kind.
It would seem to be a commonsense proceeding at present to do everything we can to endeavour to induce people to put their money into this comparatively small industry and to develop tin mining—indeed, I would add copper, lead and tungsten to this Clause—for the simple reason that we would then be getting the raw materials needed for our industries and would also save dollars. The hon. Member for Chippenham referred to the immense subsidies granted to agriculture. In that case it is food, in this case it is raw materials and metals for our industries. Whether it is possible to develop them, no one knows, but anyone reading the speech of the right hon. and learned Gentleman who replied on behalf of the Government—who advocated that just because the system we apply is not applied to every

industry—will realise that the Government are doing everything possible to prevent mining development.
It is no argument to say that one can deal with mining in the same way as other industries. They are quite different. Here one is dependent on the life of the mine and on the amount of metal in it, on innumerable circumstances which cannot be judged in the same way as a factory, a coal mine or a quarry. Some of these mines run right out to the sea—[Interruption.] At any rate they have done so, and are quite likely to do so in the past—[Interruption.] I quite agree; I should have said "in the future"; but when I sit listening to hon. and right hon. Gentlemen opposite, and then read speeches by the Leader of the House, about keeping your mind in the past, I am apt to be deflected from looking at the future, as Tories always do.
I think this is a good Clause and I think that the Government have done an ill-service to the country tonight in refusing it. They have shown no determination to help the country in getting alternatives to dollars, and in every possible way the right hon. and learned Gentleman has done all he can, with all the skill which he possesses—whether it is much or not so much—to make it difficult to start an industry in the West country, of which there are possibilities in the future; and the people of Cornwall will know that their worst enemy is once again the Socialist Government.

Mr. R. A. Butler: After the extreme lucidity of the speech of my hon. Friend the Member for Torquay (Mr. C. Williams), it is unnecessary for me to add very much. I would safely say that I hope my hon. and gallant Friend who moved this legitimate new Clause may not feel inclined to press it to a Division tonight, because I do not think that this is necessarily the only method we can adopt to deal with this serious problem. We are, however, indebted to my hon. Friends for putting forward the position in which the mining industry, and particularly mining in Cornwall, finds itself. I should only like to draw the attention of the Government to the need for dealing with this matter in the future in a sympahetic way. If the Debate has that effect, and if the right hon. and learned Gentleman pays attention to the speech of my hon. Friend the Member for


Chippenham (Mr. Eccles), who has put forward so clearly his arguments, we may have achieved some result by moving the Clause and discussing this matter.
I did not think that the arguments of the Solicitor-General were quite conclusive. In the middle of his argument, there was a chink in the armour. By his expression, "That is the way to tackle the problem"—those were his words—he made clear that there is a problem to tackle. It has not yet been tackled by the Government. Neither do I think that the argument of the right hon. and learned Gentleman, that just because we have a certain system for certain of our industries it is impossible to use another system for other industries, can hold water.
I appeal to the Government, therefore, to pay attention to the arguments which have been put forward and to the needs of the mining industry in Cornwall which, perhaps, is the most historic and most important of our counties. I say that with the full realisation that my forbears sat for Cornish rotten boroughs for many centuries. In the interests of the tradition which I have the honour still to represent in the House. I should like to feel that Cornwall was properly looked after by the Government.

Question put, and negatived.

New Clause.—(PAYMENT OF ESTATE DUTY IN RESPECT OF PROPERTY SITUATED ABROAD.)

Where any property passing on a death in respect of which estate duty is payable is situate outside the United Kingdom and by reason of any restrictions imposed upon the transfer of money or other securities from the place in which such property is situate it is not possible to obtain from that place money or securities representing the amount of the estate duty attributable to the passing of such property the Commissioners shall accept payment of such duty by the placing at the disposal of the Treasury to the order of the Commissioners in such place of the sums which, at the rate of exchange prevailing at the date of the death upon which the property passed represent the duty attributable to the passing of such property.—[Colonel Hutchison.]

Brought up, and read the First time.

Colonel Hutchison: I beg to move, "That the Clause be read a Second time."
The Clause has been put forward as the result of certain words spoken by the Solicitor-General during the Committee stage. The problem arises from the now fashionable practice in certain foreign

countries to block accounts and to hold assets belonging to people in this country in those blocked accounts, in which the capital of the account cannot be touched. The situation can arise, therefore, that when an individual dies in this country and has a large proportion of his estate abroad and held in a blocked account, he could become liable for Death Duties upon not only the estate held in this country but upon the estate held in the blocked account in the foreign country—with Death Duties rising to astronomical heights as we now find them. This is one of the many anomalies—indeed, iniquities—which can come about, because a situation can arise in which the liability for Death Duty of that individual would be greater than the total of his estate in this country, the only estate which is liquid and with which be can meet his Death Duty liability.
When I pointed out this position to the right hon. and learned Gentleman in Committee he said, I think with a touch of unconscious cynicism, that of course the Treasury would not seek to take from that individual more than the total of his estate in Great Britain. That is an intolerable situation. The Clause asks that the Treasury shall accept in blocked currency, taken at the rate of exchange existing on the day of death, the proportion of the liability to which the individual's estate is assessed in respect of that proportion which is held in the foreign country. I hope that the Treasury will see the iniquitousness of the present position and the reasonableness of the suggestions we are making in the Clause and that they will see fit to accept it.

10.30 p.m.

Mr. Selwyn Lloyd: I beg to second the Motion.
My hon. and gallant Friend has put forward his case very clearly and simply. I think he has found a reasonable method of dealing with what I should have thought was an obvious injustice. I hope the Government will consider the matter.

The Solicitor-General: What I said during the Debate referred to, or at any rate intended to say, was that the position under the law was that where part of an estate was situate overseas, the executors were accountable for Estate Duty on the whole estate to the full amount of assets here in their hands in


England. That is the position. I say at once that I think that the new Clause does indicate the existence of a real problem, but the proposal in the Clause is not one which I would advise the House to accept.
It has this defect, that the Revenue would have to accept, in discharge of Estate Duty liability, foreign assets which might be so securely frozen nothing could be done with them. All the foreign exchange control systems of different countries are more or less rigorous and it would be an unsatisfactory situation if the Revenue had to accept assets overseas which were virtually frozen, utterly inaccessible and worth little or nothing from the point of view of revenue.
May I give my proposal to the House and hope that hon. Members will think it satisfactory? We would desire to deal with the matter administratively in this way. In the case of a deceased person who leaves substantial assets overseas, we would require the personal representatives to pay the amount of Estate Duty appropriate only to those assets situate in this country, and we would defer the collection of Estate Duty attributable to the amount of the estate situate overseas until it is received. Then, of course, the question arises: At what rate would we value the estate overseas for the purpose of assessing the rate of duty attributable to the estate as a whole?

Colonel Hutchison: The rate of exchange.

The Solicitor-General: Under the present system each asset which goes to make up the estate is valued as at the time of death, and when we are valuing an asset situate abroad, which is subject or likely to be subject to some foreign exchange control system so that the asset is to a greater or lesser extent unusable or inaccessible, we discount the asset in our valuation by taking into account the risk that it might not ultimately get into the hands of any beneficiary. We would not charge Estate Duty on 100 per cent. of the normal valuation of assets, but write it down by taking into account the risks.
What we suggest as the appropriate remedy is this. We have to ascertain the scale appropriate to the whole estate and for that purpose we have to value not only the estate here but also the estate

overseas. In valuing the estate overseas we would take into account the risks to which I referred. Having done that and found the scale appropriate to the whole estate, we would then require payment of duty on that part of the estate only which is situated in this country. Then we would hold over, and not collect, the portion of duty attributable to estates overseas until they are actually received by the beneficiary in this country.
That, I think, gets over the difficulties which I indicated at the outset of my remarks, and I think it does justice to the people who are entitled to receive the estate at death. I hope the House will take the view that the right course will be for the hon. and gallant Gentleman to withdraw the Clause on the undertaking being given that the matter will be dealt with administratively in that way.

Colonel Hutchison: Does not the hon. and learned Gentleman's proposal really leave with the estate an enduring liability with respect to the estate abroad, that liability to be discharged when these assets can be liquidated? Would that be a liability in sterling, or in the currency of the country in which the overseas estate is situated? Another complication is introduced, if it is an enduring liability in sterling, if the exchange rate between that country and sterling were to depreciate in the interval.

The Solicitor-General: I do not think that that gives rise to any difficulty. If you are valuing an estate overseas you will discount the value of the asset by reference to all the risks attending it. You take into account many other risks, such as a change in the rate of exchange, the possibility that you may never be able to realise it and obtain it in this country. There are all sorts of possibilities, including the possibility of confiscation.

Mr. Jennings: Would it be possible for the view expressed by the Solicitor-General to be communicated to the taxation authorities, and for them to be advised to deal with these estates in a sympathetic way? The Solicitor-General has expressed a view with which I agree. It may be that these overseas estates may be discounted altogether and be worthless. But that may not be the view of some other person in the Department. He may seek to drive a hard and fast bargain. I should like


the Solicitor-General to express the view that the Department should deal with this matter in a sympathetic way. I think that would go a long way towards solving the difficulties with which we have been dealing.

Mr. Frederic Harris: In delaying payment for a number of years, would it be the Government's intention eventually to try to charge interest upon the amount outstanding, or would the deferred payments be free of interest?

Mr. Mott-Radclyffe: May I ask the Solicitor-General whether the value of the asset is added to the estate income for the purpose of assessing the duty attributable to the English estate?

Mr. Assheton: The proposition of the Solicitor-General commends itself to hon. Members in all parts of the House, but I do suggest that it really is asking perhaps rather more than the right hon. and learned Gentleman should ask of the House, that this should be done entirely by administrative means. Surely the taxpayer is entitled, in a matter of this sort, to have the law clearly stated and laid down by statute. I would ask the Solicitor-General to consider carefully, before we meet again, whether he cannot find it possible to put these excellent sentiments of his into a Clause which the House can consider on the next occasion.

Mr. Harris: May I have an answer to the question which I asked, Mr. Speaker?

Mr. Speaker: By leave of the House only.

The Solicitor-General: If I may have the leave of the House to say one word, I would explain that the foreign asset at reduced value is, of course, aggregated with the general amount of the estate. As regards the question of sympathetic treatment, I would remind the House that there is already a perfectly well recognised machinery for writing down, as in the case of reversions. Interest would naturally be charged because the person concerned has the use of the money until such time as he pays it.

Colonel Hutchison: rose—

Mr. Speaker: I am afraid that the hon. and gallant Member has not the right to speak again.

Question put, and negatived.

Mr. James Hudson: On a point of Order. I realise, Mr. Speaker, that you are not calling the new Clause in my name—(Allowance for capital expenditure in connection with certain buildings subject to war damage)—but I wish to ask if you would consider this point? Not only had I expected, but the Treasury, through the mouth of the Financial Secretary on 15th February last, had expected that this matter would be raised again this year. There is great disappointment in the Co-operative movement which is concerned with their temporary buildings, and if it the Clause cannot be called, I must, of course, accept that Ruling; but may I ask if it is impossible for it to be discussed?

Mr. Speaker: I am sorry, but this is one of the new Clauses that I have not called. If it is any consolation to the hon. Member I can tell him that I also did not accept a similar Clause from an hon. Member on the opposite side. So it is "fair do's all round."

Mr. Hudson: I am never consoled by anything that happens on the other side.

Mr. Glenvil Hall: I beg to move, in Clause 22, page 15, line 25, to leave out from "arrangements" to "provision" in line 26, and to insert:
made on or after the seventh day of April, nineteen hundred and forty-nine.

Mr. R. A. Butler: On a point of Order, Mr. Speaker. I understood we were going to start on the Bill proper on Monday with a view to getting as early as possible to what we consider the main Debate on the subject of the Death Duties. It would be from our point of view convenient if we finished our work now, because I am sure we have plenty of time. We have made good progress and I understood that we would finish today when we had completed the new Clauses.

Mr. Speaker: I have called the next Amendment.

Mr. Glenvil Hall: Perhaps I might be allowed to make this observation. I quite agree with what the right hon. Gentleman has just said, because somewhere about here would be a convenient place to stop, but as you, Mr. Speaker, have said you have called on me—[Interruption]. This is not a rehearsal of "The Snake Pit." I wonder what the noise was about.

Mr. Butler: I am unable to move another Motion because you, Sir, have already called an Amendment. But, on a point of Order, I understood quite definitely that we would finish tonight at the end of the new Clauses. I have an hon. Friend who wishes to put down an Amendment to Clause 13, but his opportunity will be eliminated if we proceed with Clause 22 now.

Mr. Speaker: If we adjourned at the end of the new Clauses on the Paper, it would be open to anybody to put down further new Clauses. When the right hon. Gentleman has finished his speech, we can adjourn the proceedings, but up to that point it would have been open for hon. Members to put down new Clauses.

10.45 p.m.

Mr. Assheton: That deprives the Solicitor-General of the opportunity of putting down a new Clause to meet the very important point he has just conceded in the last Debate.

Mr. Speaker: It may deprive him too, but it deprives everybody of the opportunity.

Captain Crookshank: Further to that point of Order, if there was an arrangement between the two sides that they would go as far as the new Clauses and no further, it is implicit in such an arrangement—it always has been—thatno one is going to start the Order Paper by producing a whole lot of new Clauses before the next stage of the Bill. Therefore, when the words "at the end of the new Clauses" are colloquially used, it is always the practice for a right hon. Gentleman or for somebody on that Bench to move the adjournment of the consideration of the Bill. It is quite well understood on this side of the House, and I understand the Government have sufficient control over their own supporters, to see also they do not put down new Clauses, which it would be open to them to do. There are lots of things open to hon. Members to do in this House, which no hon. Gentleman on either side of the House would think of doing.

Mr. Glenvil Hall: Further to that point of Order. It is news to me that an undertaking was given that we should stop when we reached the last of the new Clauses and disposed of them. I understood that so far as we are concerned,

we thought that if we reached the first of the Amendments to the Bill proper even if we did not finish, we should have reached a stage when it would have been reasonable to adjourn. I may say that I think that if an arrangement had been made, I should have been made aware of it. This is the first that I, for one, have heard of the arrangement that has just been spoken of. That being so, my purpose was to move this Amendment which, if I may say so, is an Amendment in line with the wishes of hon. Gentlemen opposite. It is one which we need not necessarily argue unless the Opposition desire to do so, and if they do so desire to argue it, I am quite content, Mr. Speaker, if that is your wish, and will formally move it and leave an explanation of it, if it is needed, until we meet again.

Mr. Butler: Further to that point of Order. I should like to put my cards on the table. I understood we were going to the end of the new Clauses. I had a word with the Chief Patronage Secretary and I understood that I had explained my point of view on this to him. I do not want to bring him into a further odious situation because he has been sufficiently embarrassed by the Minister of Health in the last few days. I should like to retain my own amicable and friendly relations with him.
Apart from that, my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) had wanted to move an Amendment to Clause 13 which deals with the position of the remission of customs duties on certain aircraft and parts and equipment therefor. I had agreed with him that we should not take very long on that and I had asked him, Mr. Speaker, to speak to you on this subject. If this Amendment of the Government is persisted in, it automatically cuts out my hon. and learned Friend's Amendment to Clause 13 and therefore breaks my faith with the hon. and learned Member and with the Chief Patronage Secretary. I find myself in an impossible position with my two hon. Friends and I am put in an embarrassing position with you, Mr. Speaker, if we proceed with the Government's Amendment. We should not lose ten minutes of time on Monday if we take my hon. and learned Friend's Amendment. I guarantee that we shall finish it in very good time.

The Secretary of State for the Home Department (Mr. Ede): We are anxious to meet the very reasonable point of view of the right hon. Member for Saffron Walden (Mr. R. A. Butler) and the right hon. and gallant Member for Gains-borough (Captain Crookshank) in regard to this matter, but I am not quite sure how we can now get out of the position which has been created by the Amendment having been called. We accept the statement of the right hon. and gallant Member for Gainsborough that if we could get to the position where we were merely at the end of the new Clauses no further new Clauses would be put down—at any rate with his approval—and, I gather, he would not support anyone who tried on the next occasion to down some new Clause. We do not wish to exclude the hon. and learned Member for Wirral from putting down his Amendment to Clause 13 on the assumption that has been put forward by the right hon. Member for Saffron Walden that it will be moved briefly and that then we shall get on with the business. I am bound to say that we would not look favourably on Amendments coming between Clause 13 and the Amendment which has been called, but if a way can be found by which the hon. and learned Member for Wirral can get his opportunity, we shall be very willing to acquiesce in it.

Mr. Speaker: I think I have the answer to the question. As I have not yet proposed the Question on the Amendment of the Financial Secretary to the Treasury, then if the hon. and learned Member for Wirral will put in a Manuscript Amendment to Clause 13 I will accept it. Then consideration of the Bill can be adjourned and he will start with that Amendment on Monday. I think that that is the answer.

Mr. Selwyn Lloyd: That Amendment was handed in, in manuscript, earlier in the day.

Mr. Speaker: I am very sorry, but none of us has seen it here. Anyhow, I will ask the hon. and learned Member to move his Amendment formally.

Mr. Selwyn Lloyd: Would it not be possible for me to begin my speech moving the Amendment to Clause 13—

Mr. Speaker: One cannot interrupt a speech; one can go to the end of the

speech, but, if the hon. Member will formally move and have his Amendment seconded, I think he can, by leave of the House, address himself to the Amendment when we start again.

Mr. Selwyn Lloyd: I beg to move formally, to leave out Clause 13.

Lieut.-Commander Braithwaite: I beg to second the Amendment.

Debate adjourned.—[Mr. Ede.]

Question proposed, "That the words proposed to be left out stand part of the Bill."

Debate to be resumed Tomorrow.

DOUBLE TAXATION RELIEF

Resolved:
That an humble Address be presented to His Majesty, praying that, on the ratification by His Majesty the King of Sweden of the Convention set out in the Schedule to the Draft of an Order in Council entitled the Double Taxation Relief (Taxes on Income) (Sweden) Order, 1949, a copy of which was laid before this House on 3rd May, an Order may be made in the form of that Draft."—[Mr. Glenvil Hall.]

Motion made, and Question proposed,
That an humble Address be presented to His Majesty, praying that the Double Taxation Relief (Shipping and Air Transport Profits) (Argentina) Order, 1949, be made in the form of the Draft laid before this House on 3rd May."—[Mr. Glenvil Hall.]

Mr. Assheton: I wish to ask the Financial Secretary whether, as I observe that this Order is limited to shipping and air transport profits, there is any likelihood that other sources of income may later be included?

Mr. Glenvil Hall: The right hon. Gentleman is quite right. At the moment this agreement is limited to shipping and air transport profits. It will not prevent further agreements being made covering other forms of taxation.

Resolved:
That an humble Address be presented to His Majesty, praying that the Double Taxation Relief (Profits Tax) (Republic of Ireland) Order, 1949, be made in the form of the Draft laid before this House on 21st June."—[Mr. Glenvil Hall.]

Addresses to be presented by Privy Councillors or Members of His Majesty's Household.

HOUSING (SCOTLAND) [MONEY] (NO. 2)

Considered in Committee under Standing Order No. 84.—[King's Recommendation signified.]

[MAJOR MILNER in the Chair.]

Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to amend the Housing (Scotland) Acts, 1925 to 1946, and to promote the improvement of housing accommodation in Scotland by authorising the making of contributions out of the Exchequer and of grants by local authorities, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred by the Secretary of State in making to a corporation established by an order under section two of the New Towns Act, 1946, a grant in respect of—

(a) the construction of a house or flat by an experimental method, the use for the purposes of experiment of any materials in the construction of a house or flat or the installation in a house or flat, in the course of the construction thereof, of equipment or fittings for those purposes; or
(b) the incorporation or installation in a house or flat, otherwise than in the course of the construction thereof, of materials, equipment or fittings for those purposes."—[Mr. Woodburn.]

Colonel Gomme-Duncan: Could we have a little

explanation on this matter either from the Secretary of State or the Lord Advocate?

The Secretary of State for Scotland (Mr. Woodburn): In the Bill as it now stands Clause 25 provides that a house may be erected with special experimental materials and the house may be completed with other experimental materials. That does not at the moment apply to development corporations nor to local authorities. An Amendment to be moved introduces in addition further development corporations, and it will also include development corporations acting in lieu of the new towns local authority, which, in due course, are going to get the same powers. This is an omission from the original Bill or an addition to the original Bill, whichever way one likes to look at it.

Resolution to be reported Tomorrow.

ADJOURNMENT

Resolved: "That this House do now adjourn."—[Mr. Popplewell.]

Adjourned accordingly at One Minute to Eleven o'Clock.